Financial Performance and Environmental Sustainability Reporting Practices of Listed Manufacturing Firms in Nigeria
Keywords:
Environmental sustainability reporting, earnings per share, liquidity, manufacturing firms, Profitability
Abstract
The pursuit of environmentally responsible companies to provide a balance between corporate objective of profit maximization and the need for environmental sustainability practice has caused the need to examine how financial performance will affect the environmental sustainability reporting practices of quoted manufacturing firms in Nigeria. Specifically, the study assessed how profitability and liquidity status of firms influence their environmental reporting. The study employed Ex-post Facto Research Design and made use of secondary data sourced from annual reports and accounts of sampled firms. A total of 23 firms were selected from 67 manufacturing firms quoted as at December 2018 financial year end using Proportional Sampling Technique. Regression model was used to analyze the data in order to test the hypothesis at 5% level of significance. The result of the analysis showed that profit after tax as proxy for profitability significantly affect environmental sustainability reporting practices of quoted manufacturing firms while earnings per share has a positive relationship but insignificant effect on environmental sustainability reporting. The result for liquidity ratio shows negative and insignificant relationship with environmental sustainability reporting. This study therefore concludes that when considering the influence of financial performance determinants on environmental reporting practices, factors like profitability in terms of profit after tax is significant. It is suggested that the management team of manufacturing firms show more concern about environmental sustainability and its report thereof because firms financial constraints in the area of liquidity and profitability is not a limitation in portraying themselves as environmentally responsible entities.
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Osemene, O.F., Kolawole, K.D., & Oyelakun, O. (2016). Effects of environmental accounting practices and sustainable development on the performance of Nigerian listed manufacturing companies. Journal of Sustainable Development in Africa, 18(2), 128-143.
Peter, A.O., & Mbu-Ogar, G.B. (2018). Analysis of environmental and social disclosure and financial performance of selected quoted oil and gas companies in Nigeria (2012-2016). Journal of Accounting and Financial Management, 4(2), 1- 12.
Suttipun, M., & Stanton, P. (2012). Making or not making environmental disclosures in Thailand. International Journal of Business and Social Science, 3(9), 73 – 81.
Sanusi, O.O., & Sanusi, K. A (2019). Environmental sustainability reporting practices in Nigeria: Are clouds darker or fairer in the manufacturing industry? International Journal of Social Sciences and Humanity Studies, 11 (2), 39- 60.
Umoren, A.O., Akpan, M.O., & Okafor, L.N. (2018). Oil companies performance and environmental accounting reporting in Nigeria. Asian Journal of Economics, Business and Accounting, 8(1), 1-8.
Achoki, I.N., Kule, J.W., & Shukla, J. (2016). Effect of voluntary disclosure on the financial performance of commercial banks in Rwanda. A study on selected banks in Rwanda. European Journal of Business and Social Sciences, 5(6), 167 – 184.
Adeyanju, O,D, (2012). An assessment of the impact of corporate social responsibility on Nigerian society: The examples of banking and communication industries. Universal Journal of Marketing and Business Research, 11(1), 17-43.
Ahmad, A. A., Simon, M., & Mohammad, B.I. (2017). Impact of environmental disclosure on performance of cement and brewery companies in Nigeria. Civil and Environmental research, 9(10), 40- 46.
Ahmad, M., Waseer, W.A., Hussain, S., & Ammara, U. (2018). Relationship between environmental accounting and non-financial firms’ performance: An empirical analysis of selected firms listed in Pakistan stock exchange, Pakistan. Advances in Social Sciences Research Journal, 5(1), 197-209.
Ali, A., &Hafez, A. (2014). Determining the motives or reasons that make companies disclose environmental information. Journal of Economics, Business and Management, 2(2), 117-121. doi: 10.7763/JOEBM.2014.V2.109
Ayşenur, T.A. (2016). Sustainability reporting. International Journal of Humanities and Social Science, 6(11), 140 – 145.
Bassey, E.B., Sunday, O.E., & Okon, E.E., (2013). The impact of environmental accounting and reporting on organizational performance of selected oil and gas companies in Niger - Delta region of Nigeria. Research Journal of Finance and Accounting, 4(3), 57 – 73.
Bednárová, M., Klimko, R., Rievajová, E. (2019). From environmental reporting to environmental performance. MDPI Journal of Sustainability, 11(2549), 1-12. doi:10.3390/su11092549.
Beredugo, S.B. (2014). Environmental accounting and social responsibility disclosure on the earning capacity of Nigerian manufacturing firms. Journal of Economics and Sustainable Development, 5(14), 66 – 72.
Daferighe, E. E., Akpanuko, E. E., & Offiong, P. E. (2019). Social accounting practices and profitability of companies in Nigeria. Archives of Business Research, 7(5), 233-246. doi: 10.14738/abr.75.6554
Ebieri, J. (2018). Effect of sustainability costs accounting on networth of listed firms on Nigeria stock exchange. International Journal of Economics and Business Management, 4(7), 59-76.
Echave, J. O., & Bhati, S.S. (2010). Determinants of social and environmental disclosures by Spanish companies. Paper presented at the GSMI 3rd Annual International Business Conference, Michigan, USA, 55–68.
Egbunike, A.P., & Okoro, G.E. (2018). Does green accounting matter to the profitability of firms? A canonical assessment. Ekonomski horizonti, 20(1), 17 – 26.
Eze, J.C., Nweze, A.U & Enekwe, C.I. (2016). The effects of environmental accounting on a developing nation: Nigerian experience. European Journal of Accounting, Auditing and Finance Research, 4(1), 17-27.
Huey Shi Tho, T., & Boon Heng Teh, S. (2016). The relationship between environmental disclosure and financial performance of public listed companies in Malaysia. International Business Management, 10(4), 461-467.
Gujarati, D.N., & Porter, D.C. (2009). Basic econometrics, 5thedition. Business and Economics series, McGraw-Hill Irwin (ISBN- 0071276254)
Igbodo, A.A., Uwague, A.O., & Aigbadon, B.I. (2018). Theoretical framework for environmental accounting. International Journal of Innovative Environmental Studies Research, 6(1), 27-36.
Iheduru, N.G., & Chukwuma, I.K. (2019). Effect of environmental and social cost on performance of manufacturing companies in Nigeria. International Journal of Accounting & Finance Review, 4(2), 5-12.
Jones. R., & Murrell, A. (2007). Signaling positive corporate social performance: An event study of family-friendly firms. Journal of Business Society, 40, 59-78.
Kamal, M.E. (2016). Documentation of environmental disclosure practices in the oil companies in the countries of the Arab spring – Some evidences from Egypt, Libya and Tunisia. Journal of Economics, Business and Management, 3(10), 954 – 960.
Karambu, K.G., & Joseph, M.W. (2016). Effect of corporate environmental disclosure on financial performance of firms listed at Nairobi securities exchange, Kenya. International Journal of Sustainability Management and Information Technologies, 2(2), 1-6. doi: 10.11648/j.ijsmit.20160201.11
Khaled, H., Mohamed, E., & Marwa, A.R. (2011). Factors affecting corporate social responsibility disclosure in Egypt. Corporate Ownership and Control, 8(4), 432 – 443.
Krivačić, D., & Janković, S. (2017). Managerial attitudes on environmental reporting: evidence from Croatia. Journal of Environmental Accounting and Management, 5(4), 327-341. Retrieved from https://lhscientificpublishing.com/Journals/JEAM-Default.aspx
Magali, A. D., Nicholas, N.B., & Jinghui, L. (2015). Dynamics of environmental and financial performance: The case of greenhouse gas emissions. Organization and Environment Journal, 28(4), 374 –393.
Makori, D.M., & Jagongo, A. (2013). Environmental accounting and firm profitability: An empirical analysis of selected firms listed in Bombay stock exchange, India. International Journal of Humanities and Social Science, 3 (18), 248-256.
Malik, P., & Mittal, A. (2015). A study of green accounting practices in India. International Journal of Commerce, Business and Management, 4(6), 779-787.
Mayers, R.H. (1990). Classical and modern regression with applications. PWS-Kent Publishing Company.
Moratis, L. (2018). Signaling responsibility? Applying signaling theory to the ISO 26000 standard for social responsibility, MDPI Journal of Sustainability, 10(4172), 1-20. doi:10.3390/su10114172
Moses, O., Jatau, U.V., Ande, J.O.M., & Okwoli, A.A. (2014). Firms performance and corporate social disclosures: cross-sectional evidence of Nigerian firms. International Journal of Management Practice, 7(4), 341–365.
Nasution, A.H., Erlina, & Tamizi, H.B. (2018). An analysis on the influence of profitability, firm size, liquidity, and leverage on the expression of firm’s social responsibility in banking companies listed in BEI (Indonesian Stock Exchange). International Journal of Research & Review, 5(9), 92-105.
Naz, F., Ijaz, F., &Najvi, F. (2016). Financial performance of firms: evidence from Pakistan cement industry. Journal of Teaching and Education, 5(1), 81-94.
Nwaiwu, N.J., & Oluka, N.O. (2018). Environmental cost disclosure and financial performance of oil and gas in Nigeria. International Journal of Advanced Academic Research, 4(2), 1-23.
Odia, J.O., & Imagbe V.U. (2015). Social and economic consequences of corporate social and environmental disclosures in Nigeria. Mediterranean Journal of Social Sciences, 6(6), 177 - 186. Doi:10.5901/mjss.2015.v6n6p177
Okoye, P.V.C., & Asika, E.R. (2013). An appraisal of sustainability environmental accounting in enhancing corporate productivity and economic performance. International Journal of Advanced Research, 1(8), 685-693. Retrieved from http://www.journalijar.com.
Olatunde, S.B. (2015). Base II and financial performance of deposit money banks in Nigeria. Unpublished dissertation of department of Accounting, Ahmadu Bello University, Zaria.
Osemene, O.F., Kolawole, K.D., & Oyelakun, O. (2016). Effects of environmental accounting practices and sustainable development on the performance of Nigerian listed manufacturing companies. Journal of Sustainable Development in Africa, 18(2), 128-143.
Peter, A.O., & Mbu-Ogar, G.B. (2018). Analysis of environmental and social disclosure and financial performance of selected quoted oil and gas companies in Nigeria (2012-2016). Journal of Accounting and Financial Management, 4(2), 1- 12.
Suttipun, M., & Stanton, P. (2012). Making or not making environmental disclosures in Thailand. International Journal of Business and Social Science, 3(9), 73 – 81.
Sanusi, O.O., & Sanusi, K. A (2019). Environmental sustainability reporting practices in Nigeria: Are clouds darker or fairer in the manufacturing industry? International Journal of Social Sciences and Humanity Studies, 11 (2), 39- 60.
Umoren, A.O., Akpan, M.O., & Okafor, L.N. (2018). Oil companies performance and environmental accounting reporting in Nigeria. Asian Journal of Economics, Business and Accounting, 8(1), 1-8.
Published
2021-03-03
How to Cite
Igbekoyi, O. E., Ogungbade, O. I., & Olaleye, A. G. (2021). Financial Performance and Environmental Sustainability Reporting Practices of Listed Manufacturing Firms in Nigeria. Global Journal of Accounting, 7(1), 15-24. Retrieved from http://gja.unilag.edu.ng/article/view/1203
Section
Articles
