This study explored the influence of Environmental, Social, and Governance (ESG) performance on stock returns in the Nigerian stock market. Drawing on data from 497 publicly listed companies across various sectors, the analysis applied a multiple linear regression model to evaluate the relationship between ESG scores and one-year stock returns, while controlling for debt-to-equity ratio, current ratio, and firm size. The findings indicated a statistically significant negative relationship between ESG performance and stock returns, suggesting that firms with higher ESG scores may experience reduced short-term profitability in Nigeria. Additionally, firm size was found to have a strong positive influence on returns. These results pointed to a potential misalignment between sustainability efforts and investor expectations in emerging markets. The study recommended improved ESG disclosure practices, increased investor education, and regulatory incentives to enhance ESG integration and long-term financial sustainability in the Nigerian market.
Keywords: ESG, stock return, Nigerian stock market, firm size, sustainability, regression analysis.
Written By:
Ezechimere Ugochukwu Justice
Department of Finance
School of Engineering and Management
Nanjing University of Information, Science and Technology
Tel: +8618083206863
email: ugochukwujustice555@gmail.com
Orchid ID: 0009-0003-9793-1468