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Over the past decades, many emerging countries, such as Nigeria, have achieved rapid economic growth. However, these countries achievements have grown in line with the degradation of their natural resources. Therefore, stakeholders are increasingly concerned about the drivers of green innovation capacity and firm value creation in terms of environmental governance. Yet, what drives the green innovation capacity and firm value creation is ignored especially in terms of environmental governance. Consequently, the present study is aimed at examining what drives green innovation capacity and firm value creation with regards to environmental governance. Empirical data were collected from 74 companies traded in the Nigerian Stock Exchange (NSX) for years 2012–2021. The systematic findings of the study focus in presenting the dimensions of environmental governance that drives capacities in green innovation and firm value creation, and those that are not. The findings of this study show that the more a company recognizes the importance of governance, environment, and economic governance, the higher the tendencies for companies to have capacities in green innovation. Additionally, more emphasis on environment and governance dimensions rises the inclination for capacities in green innovation. Also, the more a company recognizes the importance of social, environment, and economic dimension, the higher the tendencies for companies to create a valued firm. Likewise, more emphasis on social and environmental dimensions increases the inclination to create firm value. However, governance dimension was not found to affect the inclination to create firm value. The findings of the study have significant influence on green innovation research, because they display the value and capability of environmental governance in driving green innovation capacity and firm value creation. The study has provided shareholders, regulators, and policy makers with factors to be considered in designing policies about environmental governance. The study recommends that green innovation capacities are driven by environment and governance densities, while firm value creations are driven by social and environmental densities in the Nigerian capital market.
Salihi et al. (Mon,) studied this question.