ENVIRONMENTAL ACCOUNTING AND CORPORATE FINANCIAL PERFORMANCE: A CASE STUDY OF THE NIGERIAN MANUFACTURING INDUSTRY (CONSUMER GOODS).

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ABSTRACT

The increasing concern about environmental degradation, resources depletion, resources scarcity, environmental degradation and the sustainability of economic activity have made the development of Environmental accounting an area of interest. Adequate research is not carried out to effectively determine what environmental accounting is truly about and whether or not it has an impact on the corporate performance of quoted manufacturing firms. The study evaluated the effect of environmental accounting on profitability of quoted companies in the Nigerian Manufacturing Sector.

The study employed the ex post facto research design. The population of the study consisted of the quoted manufacturing companies in Nigeria made up of 71 companies as at 31st December, 2017 according to Nigeria Stock Exchange (NSE) which formed the entire population of the study. The study employed the convenience sampling in selection of the sampled companies. Data from the research were obtained from the annual reports of the sampled companies. The study adopted descriptive and inferential statistics.

The results showed that environmental cost had no significant relationship on return on assets with p-value (0.9615 < 0.05), the controlling effect of firm size and age in relation to environmental cost has a significant effect on return on assets with p-value (0.100274 > 0.05), environmental cost had no significant relationship on return on equity with p-value (0.4721 < 0.05) and the controlling effect of firm size and age in relation to environmental cost has a significant effect on return on equity with p-value (0.032359 < 0.05).

The study concluded that environmental accounting had no significant effect on profitability of quoted companies in the Nigerian Manufacturing Sector while the controlling effect of firm size and age in relation to environmental cost has a significant effect on profitability of quoted companies in the Nigerian Manufacturing Sector with an exception of return on assets. The study recommended that management should ensure that investors make investment in the company and the companies should not only look at environmental accounting as an expense but as an investment.

Word Count: 330

Keywords: Environmental cost, Environmental accounting, Firm age, Firm size, Profitability, Return on assets and Return on equity.

TABLE OF CONTENTS

Title Page i

Declaration ii

Certification iii

Dedication iv

Acknowledgement v

Abstract vi

Table of Contents vii

List of Tables viii

CHAPTER ONE: INTRODUCTION:

Background to the Study1

Statement of the Problem4

Objectives of the Study7

Research Questions7

Research Hypotheses 7

Significance of the Study8

Scope of the Study9

Operationalization of Variables10

Operational Definition of Key Terms11

CHAPTER TWO: LITERATURE REVIEW

2.1. Conceptual Review13

2.1.1. Environmental Accounting13

2.1.2. Forms of Environmental Accounting15

2.1.3. Scope of Environmental Accounting15

2.1.4. Objectives of Environmental Accounting 16

2.1.4.1 Reasons for the development of Environmental Accounting16

2.1.5. Accounting Interest in the Environment.16

2.1.6. Limitations of Environmental Accounting18

2.1.7. Reasons Why Companies should report Environmental Activities in Nigeria18

2.1.8. Environmental Accounting Approaches19

2.1.8.1. Environmental Costs19

2.1.9. ISO 14000 20

2.2. Financial Performance 21

2.2.1. Measurement of Financial Performance22

2.2.2. Relationship between Environmental Accounting and Firm Profitability23

2.2.3. Other Determinants of Environmental Reporting in Nigeria24

2.4. Theoretical Review26

2.4.1. Stakeholder Theory26

2.4.2. Legitimacy Theory 28

2.4.3. Positive Accounting Theory 29

2.4.4. Institutional Theory29

2.4.5. Accountability Theory 31

2.4.6. Theoretical Framework 32

2.5. Empirical Review32

2.6. Gaps in the Literature.53

2.7. Researcher’s Conceptual Framework54

CHAPTER THREE: RESEARCH METHODOLOGY

3.1. Research Design55

3.2. Population of the Study55

3.3. Sample size and Sampling Technique55

3.4. Method of Data Collection56

3.4.1 Research Instrument56

3.4.2. Validity of Research Instrument56

3.5. Method of Data Analysis57

3.6. Model Specification and Measurement of Variables57

3.7. Model Evaluation and Test of Significance59

3.8. Apriori Expectation59

3.9. Ethical Consideration59

CHAPTER FOUR: DATA ANALYSIS, RESULTS AND DISCUSSION OF FINDINGS

4.1. Descriptive Statistics and Pre-Estimation Test61

4.1.1. Descriptive Statistics61

4.1.2. Pre-Estimation Test64

4.1.2.1. Unit-root test64

4.2. Testing of Hypotheses and Analysis65

4.2.1. Testing of Hypothesis One65

4.2.2. Testing of Hypothesis Two67

4.2.3. Testing of Hypothesis Three69

4.2.4. Testing of Hypothesis Four72

4.3. Discussion of Findings74

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1. Summary of the whole study77

5.2. Summary of Findings78

5.2.1. Theoretical Findings78

5.2.2. Empirical Findings78

5.3. Conclusion80

5.4. Recommendations80

5.5. Contribution to Knowledge81

5.6. Suggestions for Further Study82

REFERENCES83

APPENDIX93

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ENVIRONMENTAL ACCOUNTING AND CORPORATE FINANCIAL PERFORMANCE: A CASE STUDY OF THE NIGERIAN MANUFACTURING INDUSTRY (CONSUMER GOODS).

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