Carbon Emission Disclosure and Cost of Equity of Listed Firms in Nigeria

This study investigates the relationship between carbon emission disclosure (CED) and the cost of equity (COE) among listed firms in Nigeria for the period 2010 to 2024. Drawing on an ex-post facto research design and balanced panel data from 151 listed firms, the study employs fixed-effects and random-effects panel regression models, with the Hausman specification test guiding model selection. Carbon emission disclosure is operationalised using a self-constructed disclosure index, while the cost of equity is estimated via the Capital Asset Pricing Model (CAPM). The study controls for firm size (FS), industry type (INDT), firm age (FA), board size (BS), research and development expenditure (R&DE), CEO characteristics (CEOC), and ownership structure (OWNS). Results reveal that carbon emission disclosure exerts a statistically significant negative effect on the cost of equity, suggesting that firms with higher levels of environmental transparency benefit from reduced investor-perceived risk. These findings are robust across alternative estimation strategies and post-estimation checks. The study contributes to the nascent but growing literature on sustainability reporting in sub-Saharan Africa and provides actionable insights for regulators, investors, and corporate managers navigating Nigeria's emerging carbon governance landscape.