Carbon Performance and Firm Value: The Role of Institutional Ownership Evidence from Listed Firms in Nigeria

This study investigates the relationship between carbon performance and firm value, with particular emphasis on the moderating and mediating role of institutional ownership among 148 listed firms on the Nigerian Exchange Group (NGX) over the period 2010–2025. Drawing on agency theory, stakeholder theory, and the resource-based view, the study employs an ex-post facto research design and panel regression techniques, including fixed effects, random effects, and system Generalised Method of Moments (GMM) estimations to address endogeneity concerns. Carbon performance is operationalised using carbon intensity and greenhouse gas (GHG) emission disclosures, while firm value is proxied by Tobin's Q and market-to-book ratio. Control variables include firm size, return on assets (ROA), leverage, Big 4 auditor dummy, board independence, industry dummies, and year dummies. The findings reveal that superior carbon performance is positively and significantly associated with higher firm value, consistent with the view that environmental stewardship creates rather than destroys shareholder wealth. More importantly, institutional ownership strengthens this positive relationship, suggesting that institutional investors serve as effective governance mechanisms that incentivise firms to improve their environmental standing. The results are robust to alternative proxies, estimation methods, and post-estimation diagnostics. The study contributes to the nascent but growing literature on environmental, social, and governance (ESG) finance in developing economies and offers actionable insights for regulators, investors, and corporate managers in Nigeria and similar emerging market contexts.