IMPACT OF ENVIRONMENTAL COSTS ON FINANCIAL PERFORMANCE OF LISTED INDUSTRIAL GOODS FIRMS IN NIGERIA (2010-2022)

Abstract

The study examined the impact of environmental costs on the financial performance of listed industrial goods firms in Nigeria. The specific objectives of the study were to examine the impact of waste management cost, environmental remediation cost, employee health and safety cost and community development cost on the financial performance of listed industrial goods firms in Nigeria. The study adopted ex-post facto research design which enabled data to be extracted from the annual reports and accounts of eleven sampled industrial goods firms quoted on the floor of the Nigerian Exchange Group for the period of 13 years, spanning from 2010-2022. The study made use of ordinary least square (OLS) pooled panel regression model, fixed effect and random effect regression models to estimate the empirical relationship between components of environmental costs employed in the study and the dependent variable at 0.05 level of significance. The outcome of the study revealed that waste management cost had negative and significant impact on the financial performance of listed industrial goods firms in Nigeria; while environmental remediation cost, employee health and safety cost and community development cost had positive and significant impact on the financial performance of the listed industrial goods firms. The implication of the findings is that environmental accounting practices employed by the sampled firms are relevantly in estimating their financial performance. The study concluded that environmental accounting practices have contributed significantly in the enhancement of financial performance of listed industrial goods firms in Nigeria. The study recommended that listed industrial goods firms in Nigeria should adopt standard environmental accounting practices and adequate provisions for employees’ welfare and community development should be made in order to encourage workers and improve on the community for sustainable optimal productivity that would lead to improved financial performance.