CORPORATE SUSTAINABILITY REPORTING AND FINANCIAL PERFORMANCE OF OIL AND GAS INDUSTRY IN NIGERIA (2007 - 2016)

SOURCE:

Faculty: Management Sciences
Department: Accountancy

CONTRIBUTORS:

Erhirhie, F. E.
Ekwueme, C. M.

ABSTRACT:

This study examined Corporate Sustainability Reporting and Financial Performance of Oil and Gas Industry in Nigeria (2017 - 2017). Issues regarding corporate sustainability have gained global relevance in recent times owing to the increasing awareness that activities of most organizations may have adverse implicational effects on the ecosystems, societies, and environments of the future. Thus, companies are now being required to extend their strategic policies and information reportage to encompass sustainability reporting practices in order to meet the environmental and social needs of both current and future stakeholders. It is on this light that this study was set out to examine the effect of sustainability reporting on the financial performance of listed oil and gas companies in Nigeria. The main objective of this study was to assess the effect of corporate sustainability reporting on Return on Assets, Return on Equity, and Return on Capital Employed of oil and gas companies listed on the Nigeria Stock Exchange. The population of the study consisted of the entire fifteen oil and gas companies listed in the Nigeria Stock Exchange (NSE) as at 31st December, 2016. The companies are: Anino Internation, Beco Petroleum Product, Capital Oil, Caverton Offshore Support Group, Conoil Plc, Eterna Plc, Forte Oil (AP), Japaul Oil, Mobil Oil Nigeria, Mrs Oil (Formerly Texaco, Chevron), Oando Plc (Formerly Unipetrol), Rak Unity Petroleum, Seplat Petroleum Development, Total Nigeria, Navitus Energy. The sample was made up of ten out of the fifteen oil and gas companies listed in the Nigerian Stock Exchange between years 2007 – 2016. The study utilized secondary data collected via financial ratios and accounts of the individual companies and content analysis. Three multiple regression models were applied in analyzing the data collected. The findings showed that social sustainability reporting exerts negative effect on all three performance proxies, howbeit only its effect on return on equity was statistically significant. Also, environmental sustainability showed overall insignificant positive effect on the three financial performance measures. The study recommends, among others, that existing sustainability reporting standards should be aligned to reflect country-specific social and environmental challenges, while its implementation should rather be obligatory rather than voluntary. The implication of the study is that majority of the oil and gas firms in Nigeria might become more conservative towards social and environmental sustainability reporting and may focus more on maximizing the economic aspect of the organizational goals.