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Mediators of Non-Financial Disclosures and Firm Value of Consumer Goods Companies

JEL Classification System

Q56; C30; M41; E16

Abstract

The study examines the mediators of non-financial disclosures and firm value among non-financial firms quoted in the consumer goods sector of the Nigeria Stock Exchange (NSE) for the period 2011 to 2018. A quantitative approach using structural equation modeling (SEM) path analysis was applied to investigate the mediating role of proposed channels of transmitting non-financial disclosures to firm value. The study finds that non-financial disclosures have significant effects on the firm value of quoted consumer goods firms in Nigeria. Profitability was found to significantly mediate the effect of social disclosures on the firm value of sampled firms in Nigeria, but the mediating effect on the environmental disclosures and firm value nexus was insignificant. The cost of capital significantly mediates the effect of both social and environmental disclosure on the firm value of consumer goods firms in Nigeria. Earnings quality was seen to be an insignificant mediator of non-financial disclosure and firm value of consumer goods firms in Nigeria. The significance of profitability and cost of capital as mediators of non-financial disclosures and firm value practically implies that management must ensure that nonfinancial disclosures are focused on improving profitability through increased sales engendered by enhanced public image, as well as achieving reduced finance cost, for such disclosures to have meaningful effects on firm value. The implication is that standardizing and regulating non-financial disclosures in Nigeria will benefit firms and enhance the quality and reliability of firms’ valuations.

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