European Journal of Accounting, Finance and Investment

Does Environmental Disclosure Matter To Financial Performance Of Quoted Industrial Goods Companies In Nigeria? An Empirical Assessment

Justin Iorakpen Iorun PhD

Department of Accounting, Benue State University, Makurdi, Nigeria

Luper Iorpev PhD

Department of Accounting, Benue State University, Makurdi, Nigeria

Michael Iorlaha

Department of Accounting, Benue State University, Makurdi, Nigeria

Keywords: environmental disclosure, financial performance, return on equity, stakeholder theory, Tobin’s

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Abstract

This paper sought to ascertain whether environmental disclosure matters to performance of quoted industrial goods companies in Nigeria or not. The growing concern about the undesirable factors affecting the environmental system, in addition to the need for sustainability of economic activity have made the emergence of environmental disclosure a focused issue of interest in Nigeria. A review of studies conducted in Nigeria and other climes exposed the fact that these studies used mostly historical financial indices and so largely neglect market indices. Furthermore, most of the studies were limited in terms of time dimension. Towards achieving the objective of this paper, the ex-post facto research design was employed, and data were collected from the annual reports and accounts of 8 industrial goods companies for a period of 5 years from 2017 to 2021. The data were analyzed using multiple regressions with the aid of STATA. Results indicated that environmental disclosure significantly and negatively affects performance using Tobin’s Q. On the other hand, it insignificantly and positively affected ROE. It is therefore, concluded that, environmental disclosure is a major determinant of financial performance based on Tobin’s Q but not a major determinant of financial performance based on ROE. The paper recommended among other things that, the implementation of environmental disclosure in organizations should be encouraged by managers, for this would enable them identify products with greater environmental costs to the organization; and these could become useful measures of departmental performance evaluation and product profitability assessment, which in the long run might improve companies’ financial performance