Uncovering the Role of Social and Environmental score on Market value of Cement firms of India

Abstract

Purpose: This study investigates the mediating influence of social and environmental score on the relationship between Total assets, proportion of women on boards, and market value of Indian cement Companies.

Methodology: We analysed data from Top 7 cement firms of India over a 4-year period using panel data analysis. Environmental disclosure scores (EDS), social disclosure scores (SDS), total assets (TA), and the proportion of women on boards (WOB) are utilized as independent variables to examine their impact on the relationships studied. Market value (MV) is the outcome variable that is influenced by the other variables in the study. Partial Least Squares Structural Equation Modelling (PLS-SEM) is employed to test the hypothesized relationships.

Results: The findings reveal significant positive relationships of social disclosure and both environmental core and market value. While no direct correlation between women on boards and market value was found, a positive association exists between women on boards and social disclosure scores((β:0.196; P<0.003).Additionally, it was found that social disclosure mediates the positive influence of total assets on environmental disclosure((β:0.126,P<0.002).

Contribution: This study contributes to the literature on ESG factors and Cement firms performance by highlighting the mediating role of social disclosure in the Indian context. It challenges the traditional view of social and environmental factors as separate entities and suggests a potential positive influence of social factors on environmental aspects.

Implications: The findings indicate that policymakers can foster sustainable practices by promoting social disclosure and enhancing gender diversity on boards. Investors may use social disclosure information to make more informed choices about firms committed to social responsibility. Cement companies can boost their market value by focusing on social and environmental initiatives and transparently sharing these efforts through social disclosure platforms.