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September 10, 2025

Environmental Accounting Disclosure and Financial Performance of Listed Manufacturing Companies in Nigeria

Key Points

Environmental audits have a significant negative impact on both return on assets and Tobin’s Q, suggesting challenges in financial outcomes from sustainability practices.
Analysis of 40 listed manufacturing companies from 2014-2023 revealed that while environmental management systems were generally ineffective, environmental sustainability showed no significant impact.
Using ex-post facto research design, the study analyzed secondary data through descriptive statistics and panel regression analysis to test hypotheses.
Findings highlight the complexities of environmental reporting benefits in emerging markets like Nigeria, necessitating customized approaches to enhance business efficiency.

Abstract

The study explored the effect of environmental accounting disclosure on the financial performance of listed manufacturing companies in Nigeria. Specifically, the study examined the effects of environmental sustainability, environmental management system, and environmental audit on return on assets and Tobin’s Q between 2014 and 2023. The study adopted ex-post facto research design. The study sample included 40 companies using purposive sampling technique. Secondary source of data was adopted by accessing information from the annual reports of selected companies. Descriptive statistics was employed to reveal the statistical properties of all parameters while panel regression analysis was utilized to test the formulated hypotheses. The study outcomes showed that environmental sustainability has a positive but statistically insignificant effect on return on assets (ROA) and Tobin’s Q; environmental management systems (EMS) had positive insignificant effect ROA, while having a negative but insignificant effect on Tobin’s Q. Environmental audit revealed a significant negative impact on the return on assets and Tobin’s Q. Firm size (control variable) demonstrated a negative significant impact on return on assets and Tobin’s Q of publicly listed manufacturing firms in Nigeria. The study concluded that while environmental reporting is vital for viable business operations, its financial advantages might not be immediately apparent in emerging market scenarios, especially Nigeria. Therefore, the study recommended among others that businesses must ensure that the adoption of EMS is not solely based on regulations but is also customized to enhance operational efficiency and reduce costs.

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