Author(s): Ahmed Oluwatobi Adekunle
Amidst growing stakeholder demand for transparency and sustainable practices, environmental disclosure (ED) has emerged as a key strategic communication tool for firms. However, the implications of ED on firm value (FV) remain contested, especially in the diverse regulatory and institutional landscape of the Asia-Pacific region. This study empirically investigates the relationship between environmental disclosure and firm value while exploring the mediating and moderating roles of institutional ownership (IO). Drawing on a balanced panel dataset of 554 publicly listed firms across 10 Asia-Pacific countries from 2015 to 2022, the study employs firm- and year-fixed effects panel regressions, interaction terms, and robustness tests to ensure model reliability and mitigate endogeneity. The findings reveal a consistently positive and statistically significant relationship between ED and FV, with institutional ownership both mediating and strengthening this relationship. Specifically, firms with higher institutional ownership derive greater valuation benefits from environmental disclosure, underscoring the importance of investor governance in ESG dynamics. Robustness checks through sub-sample analysis, winsorization, and exclusion of negative ROA firms affirm the stability of these results. The study has critical implications for regulatory authorities, suggesting that policies mandating standardized ESG disclosure frameworks and encouraging institutional investor activism can enhance corporate transparency and market value. Future research should consider the disaggregated impact of different investor types and explore causal mechanisms through experimental or longitudinal designs.