The Effect of Institutional Ownership on Sustainability Disclosure in Emerging Markets, Nigeria in Perspective

This study investigates the effect of institutional ownership on sustainability disclosure in emerging markets, with a specific focus on Nigeria. The primary purpose is to examine how institutional investors influence the transparency and extent of environmental, social, and governance (ESG) disclosures among Nigerian firms. A panel data analysis was employed on a sample of 153 publicly listed companies from 2014 to 2023, using institutional ownership as the independent variable and sustainability disclosure as the dependent variable. The analysis controlled for audit quality, board gender, firm size, profitability, and leverage. The findings reveal a significant positive relationship between institutional ownership and the level of sustainability disclosure, indicating that firms with higher institutional ownership are more likely to provide comprehensive ESG reports. This suggests that institutional investors play a critical role in promoting sustainability practices in emerging markets. The study concludes that increasing institutional ownership can enhance transparency and drive sustainable corporate behaviour in Nigeria. It recommends that regulatory bodies encourage higher institutional investor participation to foster better sustainability reporting. This study’s originality lies in its focus on Nigeria, an emerging market where institutional influence on sustainability practices is underexplored, providing valuable insights into the evolving role of institutional investors in fostering corporate sustainability in developing economies.