AMJD Volume. 11, Issue 3 (2022)

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Contributor(s)

Abiola, Idowu , Agboola Olugbengba , O
 

Keywords

Environmental Cost; Profitability; Extractive Firm; Nigeria Exchange Group
 

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Assessment of the Relationship between Environmental Cost and Profitability among Selected Extractive Firm Listed on the Nigeria Exchange Group

Abstract: Balancing the mix between environmental conservation and profit maximization has left many extractive firms causing serious damage to the ecosystem. As a result, this study examined the relationship between environmental costs and the profitability of Nigerian extractive firms. The audited financial reports of eighteen (18) extractive firms listed on the Nigerian Exchange Group (NGX) were used to obtain secondary data. Time series data for eleven (11) years spanning 2010–2020 were extracted and the data were analyzed using Pearson's pairwise correlation matrix. Results showed that there is a positive and significant relationship between ROCE and ERC (p = 0.001) and SC (p = 0.001). EPS has a positive and significant relationship with R&DC (p = 0.001), while Tobin’s Q has a positive and significant relationship with BAC (p = 0.001), SC (p = 0.001), and ERC (p = 0.001). The study concluded that environmental cost variables such as administrative costs, business area costs, and environmental remediation significantly influence the profitability of the extractive industry in Nigeria. It is therefore recommended that the management of firms within the extractive industry channel efforts towards engaging in adequate environmental spending as a way of increasing stakeholders’ trust. This will in turn lead to greater profitability.
 
 
 

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