The relationship between corporate governance quality, environmental-social-governance (ESG) disclosure, and firm valuation has attracted growing regulatory attention globally following SEBI's Business Responsibility and Sustainability Reporting (BRSR) mandate for the top 1,000 NSE-listed firms from FY2022-23. This study examines how board composition characteristics — specifically board independence ratio, gender diversity (proportion of women directors), audit committee financial expertise, and the presence of a sustainability committee — influence ESG disclosure quality scores and whether superior disclosure quality generates a statistically significant Tobin's Q premium in Indian listed firms. Using a balanced panel of 186 NSE-listed firms across six sectors (FMCG, pharmaceuticals, IT services, manufacturing, financial services, infrastructure) over 2017-2023 (seven annual periods, 1,302 firm-year observations), we estimate system GMM models that address endogeneity concerns inherent in governance-performance research. ESG disclosure quality is measured through a purpose-built 48-item index constructed from BRSR and predecessor Business Responsibility Report (BRR) disclosures. Results indicate that board independence (β = 0.31, p < 0.01) and women director proportion (β = 0.24, p < 0.05) significantly predict ESG disclosure quality, while sustainability committee presence has the strongest individual effect (β = 0.44, p < 0.001). A one-standard-deviation improvement in ESG disclosure quality is associated with a 0.14-point Tobin's Q premium (p < 0.01), representing approximately ₹840 crore in incremental market capitalisation for a median-sized firm in our sample. The premium is significantly larger in ESG-sensitive sectors (FMCG, pharmaceuticals) than in infrastructure and manufacturing, reflecting investor heterogeneity in ESG integration across sectors.
Deepika Anand Krishnamurthy (2026) studied this question.