Environmental Costs and Financial Performance of Oil and Gas Companies in Nigeria

This study ascertains the effect of environmental costs on financial performance of oil and gas companies on the Nigeria stock exchange. The specific objectives are to: Ascertain the effect of Environmental Remediation Cost on Tobin’s Q of Oil and Gas Companies listed on Nigeria Stock Exchange, and evaluate the effect of Compliance Cost on Tobin’s Q of Oil and Gas Companies on the Nigeria Stock Exchange. Ex Post Facto research design was adopted for the study. Data were gathered from the published financial statements of the eleven (11) Oil and Gas companies for eleven (12) years period. The study found that Compliance Cost and Environmental Remediation Cost have significant effect on Tobin’s Q of Oil and Gas Companies listed on Nigeria Stock Exchange. Based on this, the researchers recommended amongst others that since Environmental Remediation Cost and financial performance are positively related, then oil and gas firms should be environmentally friendly to enable them gain competitive advantage, high liquidity and reduced environmental cost in the long run.