ENVIRONMENTAL PROTECTION EXPENDITURES AND FINANCIAL PERFORMANCE OF LISTED INDUSTRIAL GOODS FIRMS IN NIGERIA

Abstract

This study examined the effect of environmental protection expenditures on the financial performance of industrial goods firms in Nigeria. Firms financial performance was measured with return on assets (ROA), return on equity (ROE) and earnings per share (EPS). Data were sourced from the annual reports and sustainability reports of the selected industrial goods firms for periods of 2011 to 2020. Data for environmental protection expenses (EPE) were obtained through a content analysis approach while data for ROA and ROE were computed with the accounting figures derived from the firms’ annual reports. Panel Regression analysis was employed in analyzing the data collected. Results from the analysis revealed that EPE exerted negative but insignificant effect on ROA and EPS while on the other hand EPE exerted positive but insignificant effect on ROE. The implication of the findings is that the level of environmental protection expenditure practices and disclosures of industrial goods firms in Nigeria is poor and has not significantly supported the firms’ performance. The study recommends among other things that corporate firms in general and industrial good firms in particular should take the issue of environmental information disclosures serious, so as to enhance the confidence of the public on the operations of the firms, which will consequently translate to better performance of the firms; and that the legislative arm of the government should tighten the legislation on environmental information disclosures of corporate entities in Nigeria by making it compulsory with specific indices.