Corporate Environmental Disclosures and Firm Financial Performance in Nigeria

Abstract

This work empirically investigated the effect of corporate environmental disclosures on firm financial performance in Nigeria. The study is vital as it portrays the extent to which corporate environmental disclosures influence firms’ financial performance in Nigeria using listed industrial goods firms as a reference point. In order to determine the relationship between corporate environmental disclosure and firms’ financial performance, some key proxy variables were used in the study, namely pollution control disclosure (PCD) and employees’ health and safety disclosure (EHSD) while firm financial performance on the hand was measured using net assets per share. Two hypotheses were formulated to guide the investigation and the statistical test of parameter estimates was conducted using Panel least squares regression model. The research design used is Ex Post Facto design and data for the study were obtained from the published annual financial reports of industrial goods firms listed on the floors of the Nigerian Exchange Group (NGX) spanning from 2019-2024. The findings generally indicate that pollution control disclosure and employees’ health and safety disclosure have positive and significant effect on firm financial performance in Nigeria at 1% level of significance. Based on this, the study concludes that corporate environmental disclosures ensure financial performance of listed industrial goods firms in Nigeria. The study therefore recommends that firms in Nigeria should sustain and also increase the disclosure of their environmental activities in their published financial statements, as it has the potential to positively influence their financial performance even though it is not mandatory.