EFFECT OF SUSTAINABILITY DISCLOSURES ON PERFORMANCE OF QUOTED NON-FINANCIAL FIRMS IN NIGERIA.

SOURCE:

Faculty: Management Sciences
Department: Accountancy

CONTRIBUTORS:

Emeka-Nwokeji, N. A.
Osisioma, B. C.
Egbunike, P. A.

ABSTRACT:

This study empirically evaluated the effect of sustainability disclosures on performance of quoted non-financial firms in Nigeria. Environmental sustainability disclosures, social sustainability disclosures and corporate governance sustainability disclosures were used to proxy for sustainability disclosures, while Return on Assets (ROA) and Tobins Q were used to proxy firm performance. The study selected ninety three out of one hundred and twenty non-financial firms listed on the Nigerian Stock Exchangeas at 2015 using Taro Yamani method of sample determination.Ex Post Facto research design was adopted and the secondary data was collected from annual reports and internet of sampled firms from 2006 to 2015 through content analysis. The data were analysed with descriptive statistics, correlation analysis, principal component analysiswhile pooled ordinary least squares regression was employed to test formulated hypotheses. The analysis showed that the overall sustainability disclosures have significant positive effects on companies’ performance both in terms of ROA and Tobins Q.When treated individually, environmental disclosure have positive but insignificant effect on ROA and a significant positive effect of Tobin’s Q. Social sustainability disclosures positively and significantly affect ROA but have negative and insignificant effect on Tobins Q. Governance sustainability disclosures have significant positive effect on firm performance both in terms of ROA and Tobins Q. Based on these findings, the study recommended among other things that companies should foster greater sustainability and long-term value creation by integrating sustainability metrics into their reporting model and strategies. Firms in Nigeria should adopt and disclose environmental friendly policies like making donation towards environmental protection and providing for alternative source of energy considering resultant carbon emissions associated with using more energy consuming assets and finitness of these natural resources.Firms should make their investment attractive by addressing such issues as investment in human capacity building, strategic provision of social financial and in-kind donations, increasing workforce through job creation since they are not only important for long term survival but will reduce their vulnerability to societal crises.