SUSTAINABILITY REPORTING AND FINANCIAL PERFORMANCE OF FIRMS IN NIGERIA

ABSTRACT

This study empirically investigates the nexus between sustainability reporting and financial performance of firms in Nigeria, using data for twenty (20) industrial and consumer goods sector firms listed on the Nigerian Exchange Limited (NGX) for the period 2015-2020. The composite value of Return on asset (ROA) and Return on Equity (ROE) - the dependent variable is regressed on three explanatory variables: economic performance disclosure; social performance disclosure; and environmental performance disclosure.

Employing panel data econometric techniques, the empirical findings showed that: economic disclosure practices had a negative and insignificant relationship with industrial and consumer goods firms’ financial performance; social performance disclosure has a negative and significant relationship with industrial and consumer goods firms’ financial performance; and environmental practices had a positive and significant relationship with industrial and consumer goods firms’ financial performance.

In view of the foregoing empirical findings, it is recommended that: firms should strive to engage more on sustainability reporting and as well disclose these activities in their financial statements; industrial and consumer goods companies should ensure that disclosed items reflect their true performance; industrial and consumer goods firms should improve more on economic related activities and as well disclose these activities in their financial statements; and efforts should be made by these firms to monitor their social disclosure practices.