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

Kornom-Gbaraba Michael Eric
Accountancy Department,
University of Nigeria Nsukka
mgbaraba@gmail.com
&
Emengini Emeka Steve
Accountancy Department,
University of Nigeria Nsukka
emeka.emengini@unn.edu.ng
&
Aernan Johnson Emberga
Accountancy Department,
University of Nigeria Nsukka
Josnan4u@gmail.com

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 analysed 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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