Effect Of Environmental Costs Disclosure On The Financial Performance Of Quoted Oil And Gas Companies In Nigeria

ABSTRACT

This study examines the effects of environmental cost disclosure on the financial performance of quoted oil and gas companies in Nigeria. The research work reviewed data and other related literature between 2006 and 2015. Data on environmental cost were collected to measure waste management cost (WMC) and environmental taxes and fines (ETF) respectively. While data on financial performance proxies were return on assets (ROA), earnings per share (EPS) and return on capital employed (ROCE). Multiple regression analysis was used to analyse the data, employing the f-statistics to measure overall variables significance, r-square to determine the explanatory strength and power of all independent variables on the dependent variables, and Durbin Watson formula to determine autocorrelation amongst the variables. Results are significant at 5% level of significance and it shows that there is a significant positive relationship between the environmental cost and financial performance of firms. Findings also revealed that adequate disclosure on environmental cost, compliance to corporate environmental regulations have positive significance on financial performance. Thus the study recommended regulatory enforcement for adequate environmental cost disclosure and proper reporting.