IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v7y2023i6p1608-1636.html
   My bibliography  Save this article

Sustainability Reporting and Financial Performance of Quoted Consumer Goods Companies in Nigeria

Author

Listed:
  • Sunday Nosa Ugbogbo

    (Department of Accounting, Benson Idahosa University, Benin City, Edo State, Nigeria.)

  • Tracy Eghosa Obamwonyi

    (Department of Accounting, Benson Idahosa University, Benin City, Edo State, Nigeria.)

Abstract

The broad objective of this study was to examine the effect of sustainability reporting on financial performance of quoted consumer goods companies in Nigeria. To achieve that objective, the study specifically sought to ascertain the extent to which environmental sustainability reporting, social sustainability reporting, employee health and safety sustainability reporting, and economic sustainability reporting affected accounting and market performance proxies (Gross Profit after Tax, Earnings before Interest and Tax and Return on Capital Employed). In this study, ex-post facto research design was employed on panel data which was sourced from related company annual financial reports. Pooled Ordinary Least Square (POLS) regression analysis was conducted, and diagnostic test conducted to ensure that there was no violation of a vital least square assumption while the formulated hypotheses were tested based on the uniqueness of the specified model. In this study the least square dummy variable regression was employed on Return on Capital Employed and Gross Profit after Tax Margin models while Robust Least Square Regression analyses technique was employed on Earnings before Interest and Tax model. The probability values, (p- values) of the regression results formed the basis for decision making. The findings revealed that environmental sustainability reporting had a positive and significant effect on the performance measure of earnings before interest and tax, but it revealed an insignificant effect on return on capital employed and gross profit after tax margin. That was seen to be consistent with the legitimacy theory which suggested that corporate duties did not end at reaping profit but that commitment to environmental support programme and activities would result in profit for shareholders. It was found that social sustainability reporting had both positive and negative effects on performance to the extent that while it was seen to be negative on return on capital employed and gross profit after tax, its effect on earnings before interest and tax was positive. Therefore, it was recommended that policies that would sustain reporting on environmental issues (such as mandatory disclosure on environmental issues) should be encouraged since it had been shown to be beneficial to the health and survival of the firms.

Suggested Citation

  • Sunday Nosa Ugbogbo & Tracy Eghosa Obamwonyi, 2023. "Sustainability Reporting and Financial Performance of Quoted Consumer Goods Companies in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(6), pages 1608-1636, June.
    • Handle: RePEc:bcp:journl:v:7:y:2023:i:6:p:1608-1636
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-7-issue-6/1608-1636.pdf
    Download Restriction: no
    File URL: https://www.rsisinternational.org/journals/ijriss/articles/sustainability-reporting-and-financial-performance-of-quoted-consumer-goods-companies-in-nigeria/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Muhammad Ibrahim Abdullah & Samra Ashraf & Muddassar Sarfraz, 2017. "The Organizational Identification Perspective of CSR on Creative Performance: The Moderating Role of Creative Self-Efficacy," Sustainability, MDPI, vol. 9(11), pages 1-21, November.
    2. Xie Hongming & Bilal Ahmed & Arif Hussain & Alam Rehman & Irfan Ullah & Farman Ullah Khan, 2020. "Sustainability Reporting and Firm Performance: The Demonstration of Pakistani Firms," SAGE Open, , vol. 10(3), pages 21582440209, September.
    3. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    4. A. E. Adegboyegun & M. E. Alade & E. Ben-Caleb & A. O. Ademola & D. F. Eluyela & O. A. Oladipo, 2020. "Integrated reporting and corporate performance in Nigeria: Evidence from the banking industry," Cogent Business & Management, Taylor & Francis Journals, vol. 7(1), pages 1736866-173, January.
    5. Camelia Oprean-Stan & Ionica Oncioiu & Iulia Cristina Iuga & Sebastian Stan, 2020. "Impact of Sustainability Reporting and Inadequate Management of ESG Factors on Corporate Performance and Sustainable Growth," Sustainability, MDPI, vol. 12(20), pages 1-31, October.
    6. Nurlan Orazalin & Monowar Mahmood, 2019. "Determinants of GRI-based sustainability reporting: evidence from an emerging economy," Journal of Accounting in Emerging Economies, Emerald Group Publishing Limited, vol. 10(1), pages 140-164, September.
    7. Marko Hakovirta & Navodya Denuwara, 2020. "How COVID-19 Redefines the Concept of Sustainability," Sustainability, MDPI, vol. 12(9), pages 1-4, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ogah, Inalegwu & Dr Lambe, Isaac & Professor Aza, Mangba Solomon, 2024. "Governance and Social Sustainability Reporting and Financial Performance of Listed Oil and Gas Firms in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(1), pages 651-670, January.
    2. Ogah, Inalegwu & Dr. Lambe, Isaac & Professor. Aza, Mangba Solomon, 2024. "Economic & Social Sustainability Reporting and Financial Performance of Listed Oil and Gas Firms in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(8), pages 188-206, August.
    3. Ana Zrnic & Dubravka Pekanov & Ivana Fosi?, 0000. "GRI-based Sustainability Reporting in the European Union Energy Sector: A Comprehensive Overview," Proceedings of Economics and Finance Conferences 14115959, International Institute of Social and Economic Sciences.
    4. Salsiah Mohd Ali & Syeliya Md Zaini & Mazurina Mohd Ali & Siti Syaqilah Binti Hambali, 2023. "Institutional Ownership and Integrated Reporting in the Digital Age: A Conceptual Exploration of Firm Performance in Malaysia," Information Management and Business Review, AMH International, vol. 15(4), pages 67-76.
    5. Haseeb Ur Rahman & Muhammad Zahid & Amin Jan & Mamdouh Abdulaziz Saleh Al‐Faryan & Khaled Hussainey, 2024. "Is it the mere female directors or their attributes that matter for the quality of corporate sustainability disclosures?," Business Strategy and the Environment, Wiley Blackwell, vol. 33(2), pages 661-678, February.
    6. Nur Ain Shahrier & Jessica Sze Yin Ho & Sanjaya Singh Gaur, 2020. "Ownership concentration, board characteristics and firm performance among Shariah-compliant companies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 24(2), pages 365-388, June.
    7. Barbara Su, 2023. "Banking practices and borrowing firms’ financial reporting quality: evidence from bank cross-selling," Review of Accounting Studies, Springer, vol. 28(1), pages 201-236, March.
    8. Yeon‐Koo Che & Kathryn E. Spier, 2008. "Strategic judgment proofing," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 926-948, December.
    9. Fabrizio Rossi & Maretno Agus Harjoto, 2020. "Corporate non-financial disclosure, firm value, risk, and agency costs: evidence from Italian listed companies," Review of Managerial Science, Springer, vol. 14(5), pages 1149-1181, October.
    10. Klapper, Leora F. & Love, Inessa, 2004. "Corporate governance, investor protection, and performance in emerging markets," Journal of Corporate Finance, Elsevier, vol. 10(5), pages 703-728, November.
    11. Sevcan Yesiltas, 2009. "Financing Constraints and Investment: The Case of Turkish Manufacturing Firms," 2009 Meeting Papers 874, Society for Economic Dynamics.
    12. Kane, Gregory D. & Velury, Uma, 2004. "The role of institutional ownership in the market for auditing services: an empirical investigation," Journal of Business Research, Elsevier, vol. 57(9), pages 976-983, September.
    13. Tan, Monica & Liu, Bin, 2016. "CEO's managerial power, board committee memberships and idiosyncratic volatility," International Review of Financial Analysis, Elsevier, vol. 48(C), pages 21-30.
    14. Theodore E. Christensen & Hang Pei & Spencer R. Pierce & Liang Tan, 2019. "Non-GAAP reporting following debt covenant violations," Review of Accounting Studies, Springer, vol. 24(2), pages 629-664, June.
    15. Ju Ryum Chung & Eun Jung Cho & Ho-Young Lee & Myungsoo Son, 2017. "The impact of labour unions on external auditor selection and audit scope: evidence from the Korean market," Applied Economics, Taylor & Francis Journals, vol. 49(48), pages 4833-4850, October.
    16. Shin-ichi Fukuda, 2018. "Companies’ Financial Surpluses and Cash/Deposit Holdings," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 14(3), pages 369-396, July.
    17. Boubakri, Narjess & Ghouma, Hatem, 2010. "Control/ownership structure, creditor rights protection, and the cost of debt financing: International evidence," Journal of Banking & Finance, Elsevier, vol. 34(10), pages 2481-2499, October.
    18. Hartarska, Valentina M. & Nadolnyak, Denis A., 2012. "Financing Constraints and Access to Credit in Post Crisis Environment: Evidence from New Farmers in Alabama," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124882, Agricultural and Applied Economics Association.
    19. Hasan, Iftekhar & Lozano-Vivas, Ana, 2002. "Organizational Form and Expense Preference: Spanish Experience," Bulletin of Economic Research, Wiley Blackwell, vol. 54(2), pages 135-150, April.
    20. Fabbri, Daniela & Menichini, Anna Maria C., 2016. "The commitment problem of secured lending," Journal of Financial Economics, Elsevier, vol. 120(3), pages 561-584.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:7:y:2023:i:6:p:1608-1636. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.