DISCLOSURE OF ENVIRONMENTAL FACTORS AND MARKET REACTIONS: AN EMPIRICAL ANALYSIS OF FIRMS IN SELECTED SUB-SAHARAN AFRICAN COUNTRIES

Abstract

Abstract Environmental sustainability has become a major focus in financial markets and corporate governance. This study therefore examined how market reactions are affected by disclosing environmental factors in selected firms in Sub Saharan African Countries. The research employed a quantitative approach and used secondary data obtained from 26 selected companies in 18 Sub Saharan African countries between 2019 and 2023 based on the availability of data. Regional stock exchanges provided data on firms’ market reactions, while selected firms’ annual reports and databases provided key environmental factors parameters. Descriptive statistics, multipartite testing and other statistical techniques were used for data analysis. The findings discovered that environmental factors positively affect firms’ stocks, as indicated by lower stock price volatility and higher investor confidence. The results also disclosed that energy usage ratio, waste management score and firms’ size affect the market reactions of the selected firms in Sub Saharan African Countries. The research highlighted the need for standardized environmental factors disclosure frameworks to promote sustainable business practices by exploring the significance of environmental factors, which helps to preserve the environment and promote social welfare in Sub-Saharan Africa. The study addressed an understudied area in the environmental and market reactions interactions in the region.