Environmental and Social Accounting Practices, and Financial Performance of Cement Companies: Empirical Evidence from Nigeria

Okafor, Uchenna Israel, Oji, Richard Nduka, Daferighe, Emmanuel Emeakponuzo


Engaging in environmental and social activities and disclosing same in the annual financial or sustainability report by business entities has been controversial for over three decades among stakeholders across different industries. Therefore, the objective in the research was to test the empirical nexus of social investment cost (SIC) and environmental protection cost (EPC) in relation to financial performance of quoted cement companies in Nigeria. Financial performance was further denominated into sales turnover (ST) and market value of firms (MVF) to respectively develop two hypotheses in their alternative forms. While the researchers adopted ex poste facto research design, secondary data were obtained from relevant annual financial reports and database of the Nigerian stock exchange for 2009-2017. Descriptive statistics were utilized for data presentation before estimating the test result by adopting multivariate regression model. However, the test result for H1 indicated significant P-value and F-value at 5% level of significance. In addition to accepting H1, positive Coefficients by SIC, EPC, and control variable (total assets-TA) demonstrated a strong adjusted R-square of 65.2483% association with ST, although, the coefficient for intercept was negative. Similarly, the test result for H2 also indicated significant P-value and F-value at 5% level of significance. In addition to accepting H2, positive coefficients of intercept, EPC, and the control variable, market capitalization (MCAP) of cement companies in Nigeria cumulatively contributed a weak adjusted R-square of 25.213% to MVF. However, the coefficient for SIC was negative. Besides observing low level and inconsistent environmental and social accounting practices (ESAP) among cement companies in Nigeria, the researchers concluded that such insignificant level of ESAP by such companies influenced their financial performance. Hence, the researchers recommended cement companies to adopt ethical approach towards expanding investment in ESAP.

Keywords: Environmental and Social Accounting Practices, Corporate Social Responsibility Disclosures, Sustainability Reporting, Financial Performance, Accounting Measure of Financial Performance, Capital Market measure of Financial Performance

DOI: 10.7176/EJBM/12-20-07

Publication date:July 31st 2020

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