PDF Impact of ESG Reporting on Perceived Financial Performance of Indian Firms: Evidence from Indian Retail Investors

Abstract

Environmental, Social and Governance (ESG) reporting has become an important non-financial disclosure mechanism for firms operating in modern capital markets. In India, the growing relevance of structured sustainability disclosures has increased the importance of ESG information for investors. However, the relationship between ESG reporting and financial performance remains debated, particularly from the perspective of retail investors. This study addresses Objective 2 of the broader research by examining the impact of ESG reporting on perceived financial performance of Indian firms. Using survey data collected from 633 Indian retail investors, ESG reporting is measured through environmental, social and governance disclosure dimensions, while financial performance is measured through investor perceptions regarding profitability, valuation, risk reduction, long-term stability and overall financial performance. The study proposes a regression-based model suitable for Excel Data Analysis Tool. Preliminary analysis indicates that ESG reporting has a positive and statistically significant impact on perceived financial performance. The simple regression model shows that ESG reporting explains approximately 28.8% variation in perceived financial performance. A further dimension-wise regression indicates that governance disclosure has the strongest influence, followed by social disclosure, while environmental disclosure shows a weaker independent effect. The findings suggest that retail investors perceive ESG reporting as financially relevant, especially when it reflects governance quality, transparency and long-term stability