The study aims to demonstrate the effect of climate change disclosure (CCD) on firm market value and the moderate effect of a corporate social responsibility (CSR) committee in Saudi Arabia (SA).
The study used Saudi firms listed on Tadawul during 2018–2022 except financial firms. We exclude financial firms because of the variety of their equity characteristics and the lack of comparability with non-financial firms. We also excluded sectors that are not related to climate change, such as media, entertainment and technology services. After the missing data were eliminated, the final sample consists of 143 firms (715 observations). We collected the data from LSEG Workspace, annual reports and sustainability reports. This study uses ordinary least squares and the dynamic system-generalized method of moments to test the research hypotheses.
The positive relationship between CCD and firm value is driven by factors such as transparency, risk management, reputation, operational efficiency and long-term sustainability. However, the relationship can vary on the basis of industry, disclosure quality and investor perceptions. The presence of a CSR committee plays a crucial role in strengthening the positive association between voluntary CCD and firm market value. The study concludes that the characteristics of CSR committees (size, power, gender diversity and financial expertise) moderate the relationship between voluntary CCD and firm market value.
This research does not address CCD practices and their impact on market value over time. Also, this research does not address CCD and sector-specific analysis to understand if the impact varies across different industries, especially those that are heavily impacted by climate change such as oil and gas, petrochemicals, and utilities.
The study helps investors and lenders know the impact of CCD on market value. It also helps provide important information about the environment and claimate change in Saudi firms.
This study fills this gap by using multi-year panel data from Saudi Arabia and testing whether CSR committee attributes strengthen or weaken investor responses to climate-related disclosure. The results reveal a positive association between climate change disclosure and firm value. However, the moderating role of CSR committees is mixed. Specifically, the interaction effects suggest that CSR committees may substitute rather than complement the value relevance of climate change disclosure, indicating overlapping signalling and legitimacy mechanisms in the Saudi context.
