Environmental, Social, Governance Risks and Stock Market Performance in Africa


Yusuf Olatunji Oyedeko
Department of Finance, Faculty of Management Sciences, Federal University, Oye-Ekiti, Nigeria.
Babajide Olumuyiwa Owoniya, Betty Oluwayemisi Ali-momoh
Department of Accounting, Faculty of Management Sciences, Federal University Oye-Ekiti, Nigeria.


The study employed ex-pos facto research design and secondary source of data was used and the data was sourced from World Bank Data Indicators. The study focused on five African countries which were chosen based on their nominal gross domestic product which are Egypt, Nigeria, South Africa, Algeria, Ethiopia (NEESA) and over time series of 27 years ranging from 1996 to 2022 and this constitutes one hundred and thirty-five observations. The environmental, social and governance risk was capture using three years rolling standard deviation while the stock market performance was measure as ratio of market capitalization of listed domestic companies to gross domestic product. The study found short run the dynamic changes in the previous value of stock market performance, governance risk and environmental risk could lead to negative changes in the present stock market performance and while previous values of social risk has positive effect on stock market performance. The study concluded that there is bi-causality between the stock market performance and environmental, social and governance risks in Africa. The study recommended that ESG factors and overall sustainability outlook when evaluating investment opportunities most especially in the African stock markets. In addition, the regulatory authorities in the stock markets should promote ESG integration, transparency and accountability in order to attract more investors and enhance stock market performance in African countries.