Environmental Cost Disclosure and Corporate Performance of Quoted Oil Companies: The Nigerian Experience

AFRAG011

Environmental Cost Disclosure and Corporate Performance of Quoted Oil Companies: The Nigerian Experience

Kornom-Gbaraba Michael Eric Accountancy Department,

Faculty of Business Administration University of Nigeria, Enugu Campus mgbaraba@gmail.com

Emengini Emeka Steve Accountancy Department,

Faculty of Business Administration University of Nigeria, Enugu Campus emeka.emengini@unn.edu.ng

Aernan Johnson Emberga Accountancy Department,

Faculty of Business Administration University of Nigeria, Enugu Campus

josnan4u@gmail.com

Abstract

This study examines the impact of environmental cost disclosure on corporate performance of quoted oil companies in Nigeria. The independent variable for the

study is environmental cost disclosure while the dependent variable is corporate performance. The proxies for environmental cost disclosures are community development costs, waste management cost, employee health and safety costs and fines, penalty and compensation disclosure while the proxy for corporate performance is return on asset (ROA). The main source of data is secondary; sourced from the published financial statement of the selected firms. A sample of 9 oil firms listed on the Nigerian Stock Exchange for a period of Ten years (from 2009-2018) was selected using the non-probability sampling technique. The data collected were analyzed using descriptive statistics and Ordinary Least Square Method. The results revealed that community development costs disclosure has positive but insignificant impact on return on asset of quoted oil companies in Nigeria; whereas waste management costs disclosure has negative and non-significant effect on return on asset of quoted oil companies in Nigeria. The study also revealed that employee health and safety costs disclosure and fines, penalties and compensations disclosure have positive significant impact on return on asset of quoted oil companies in Nigeria. The study, therefore recommends that among others, management of oil companies in Nigeria should increase spending on environmental issues in their host community in order to improve their performance since this has positive effect on corporate performance. The companies are encouraged to improve on the content of their environmental disclosure in the annual financial statements. Thus, improvement on content of environmental disclosure will impact positively on environmental responsibility and value relevance of the companies. These findings have implications on companies that pollute the environment in the sense that their future solvency may be eroded with gradual depletion in earnings. Keywords: Environment, Cost disclosure, Sustainability, Oil companies, Pollution

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