Value Relevance of ESG Accounting Disclosure: Evidence from SubSaharan Africa Public Health Companies

Abstract

The study examined the value relevance of ESG information disclosures in healthcare sectors, by observing about 15 companies in sub-Saharan Africa (SSA), from 2006-2020, using a panel regression analysis. The study employed four models to explicate the individual and aggregate effect of the value relevance of the disclosure, ESG information, and Variance Inflation Factor was used to confirm the absence of the problem of multicollinearity. Signalling theory and Agency theory were considered in this study. Our findings therefore expound that the ESG disclosures, either aggregately or individually, positively augments the value of healthcare companies significantly, except for social disclosures with an insignificant effect. We further compare the value relevance of ESG disclosure against the profitability performance of healthcare companies in SSA. Hence, findings revealed that ESG disclosure is of higher value relevance compared to profitability performance. The study therefore concludes that the disclosure of non-financial information, ESG, as against financial information, Returns on Asset, augments the value of an average healthcare company in sub-Saharan Africa.