Environmental Costs Accounting and Return on Equity of Manufacturing, Oil and Gas Firms in Southwest, Nigeria

Environmental Costs Accounting and Return on Equity of Manufacturing, Oil and Gas Firms in Southwest, Nigeria

Abstract: This research examined the effects of environmental costs on the accounting and return on equity of manufacturing firms in Nigeria. Specifically, the study examined the effect of environmental costs (community development costs, waste management costs, expenses for employee health and safety, and research and development costs) on the return on equity of oil and gas and manufacturing firms in Nigeria. The study is quantitative in nature, and secondary data sourced from the published quoted financial reports of sampled firms for 20 years was analyzed across 10 sampled firms in the oil and gas and manufacturing sectors using descriptive statistics, Pearson correlation, unit root test, panel regression with regards to pooled ordinary least square (OLS) estimation, fixed effect estimation, two-ways fixed effect estimation, random effect estimation, and other position estimation tests, which include the restricted F-test, Hausman test, Wald test of heterogeneity, Pearson test of cross-sectional dependence, and Wooldridge test. Four models were developed. It was discovered that community development costs have a positive but insignificant effect on return on equity. It was further discovered that environmental costs have a statistical relationship with the performance of firms in the oil and gas and manufacturing sectors in Nigeria. Environmental costs should be seen as an asset that will generate more income for the organization. This will not just improve the development of the community, but it might also enhance the overall equity of the manufacturing, oil, and gas firms in Nigeria.

AMJD Volume. 11, Issue 2 (2022)

Contributor(s)

Keywords

Download Full-text (PDF)

Environmental Costs Accounting and Return on Equity of Manufacturing, Oil and Gas Firms in Southwest, Nigeria