Governance Sustainability Disclosure and Firm Market Value in Nigeria: The Mediating Role of Investor Trading Behaviour

Abstract

The increasing emphasis on sustainability reporting has renewed interest in whether governance-related disclosures are sufficiently value relevant to influence investor behaviour and firm valuation in emerging capital markets. This study examines the effect of governance sustainability disclosure on the market value of listed industrial goods firms in Nigeria and investigates the mediating role of investor trading behaviour. Anchored primarily on signalling theory, with complementary insights from agency and stakeholder theories, the study adopts an ex-post facto panel design covering nine listed firms from 2010 to 2025. Governance sustainability disclosure is measured using a graded content-analysis index, firm market value is proxied by Tobin’s Q, and investor trading behaviour is measured by share turnover, with trading volume used for robustness analysis. Random-effects panel regressions with firm-clustered robust standard errors are estimated, while mediation is assessed using a 5,000-replication firm-level bootstrap procedure. The results indicate that governance sustainability disclosure has a positive but statistically insignificant effect on firm market value (b = 0.667, p = 0.736) and no significant effect on investor trading behaviour (b = 0.0037, p = 0.981). Investor trading behaviour also has no significant effect on market value (b = 0.0159, p = 0.916), while the bootstrapped indirect effect is insignificant. The findings suggest that governance sustainability disclosure has yet to function as a sufficiently strong market signal to induce observable investor response or valuation effects in Nigeria’s industrial goods sector.