Do Sustainable Development Goal Disclosure Matter? Unpacking Value Relevance in the European Context

Abstract

This study explores the value relevance of Sustainable Development Goal (SDG) disclosures by European listed firms, responding to calls for greater integration of sustainability into corporate strategy and reporting. Drawing on agency theory and voluntary disclosure theory, we examine whether the quality of SDG-related disclosures affects firm value, and how the environmental, social, and economic dimensions of such disclosures influence investor perceptions. Using a sample of European firms and a disclosure quality index, our results show that high-quality SDG disclosures are positively associated with market value, particularly when disclosures are substantive rather than symbolic. This study contributes to the growing discourse on the financial implications of non-financial disclosure, offering practical insights for corporate managers, regulators, and investors. It underscores the importance of credible and comprehensive SDG reporting in capital markets, particularly in light of evolving stakeholder expectations and regulatory pressures.