Title: CLIMATE-RELATED FINANCIAL DISCLOSURES (CRFD) AND THE VALUE OF LISTED ENVIRONMENTALLY SENSITIVE COMPANIES IN CANADA

Authors: Ugoh, Timothy Terver, Chris Smith and Abdullahi, O. Ismaila

Abstract: Purpose This study investigates how climate-related financial disclosure (CRFD) influences firm value in Canada’s environmentally sensitive sectors, with a focus on whether institutional ownership moderates this relationship. Design/Methodology/Approach Using panel data from listed 25 high-emission, resource-dependent firms between 2015 and 2024, the study employs dynamic panel Generalized Method of Moments (GMM) estimation to mitigate endogeneity concerns. CRFD indices are constructed in alignment with the Task Force on Climate-related Financial Disclosures (TCFD) and International Sustainability Standards Board (ISSB) frameworks. Firm value is measured using Tobin’s Q, market-to-book ratio (MBR) and stock returns. Findings CRFD shows a significant positive effect on Tobin’s Q and MBR, indicating that climate transparency enhances market valuation. However, no significant effect is found for stock returns, suggesting limited short-term market responsiveness. The interaction analysis reveals that institutional ownership concentration significantly strengthens the CRFD–valuation link for Tobin’s Q and MBR, underscoring the role of investor structure in shaping disclosure credibility and market interpretation. Originality/Value This study offers the first sector-specific Canadian evidence on the valuation effects of CRFD, integrating institutional ownership as a moderating mechanism. The use of multiple valuation proxies and a disclosure index grounded in TCFD/ISSB guidelines provides a robust, replicable framework for assessing ESG disclosure impacts.

Keywords: Climate-related financial disclosure, Tobin’s Q, market-to-book ratio, stock returns, institutional ownership, environmentally sensitive sectors, Canada.

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