Abstract
Compliance with legal requirements is mandatory for corporate entities in Nigeria, but decision making in a situation that is not legally binding relies on the ethical standard of the company. Sustainability reporting in Nigeria is voluntary, therefore the quality of disclosure is at the discretion of company leadership. This study evaluated the ethical behaviour of Nigerian commercial banks and how it affects their sustainability disclosure quality. The Focus was on the proportion of each bank’s corporate annual reports that contain environmental disclosure, social responsibility disclosure and governance disclosure. Information on the banks’ websites that relate to sustainability policies or activities were also considered. This work includes an extensive review of relevant literature, hinging the study on legitimacy theory. The Cross-sectional research design was utilized in undertaking the study. A sample of fourteen (14) commercial banks was selected from the companies listed on the Nigerian stock exchange and analysed for a period of 2008-2017 financial years. Pearson Correlation and Multivariate Linear model analysis were employed to test the hypotheses. Findings revealed a positive relationship between corporate ethical standard and sustainability disclosure of Nigerian commercial banks. The level of corporate ethical standard in Nigerian banks causes significant positive change in environmental reporting quality, social responsibility reporting quality and governance reporting quality. It is hereby, recommended that company leadership should build strong corporate ethical culture since it directly affects their sustainability. While quality sustainability reporting practice is beneficial to the reporting entity, stakeholders and environment.
Highlights
The ethical standard of a company evaluates its actions in terms of what is morally right or acceptable, beyond legal requirements
Research Methodology Secondary data were gathered to measure corporate ethical standard (ETS), data was gathered on clearly stated policies, fulfilment of Tax obligation, compliance with required reporting standards, any contingent liabilities arising from legal default or litigation against the firm, malpractice and scandal, scoring -1 where the company defaults or +1 where the company has not defaulted
Some of the analyzed reports scored the lowest mark (1) for the reporting quality of environmental and social impacts while, corporate governance reporting quality was at least the score ‘2’, which means that all the reports analyzed in the sample had disclosure on corporate governance
Summary
The ethical standard of a company evaluates its actions in terms of what is morally right or acceptable, beyond legal requirements. It is good to comply with legal requirements, as expected, but when a decision is taken in a situation that is not legally binding, the appropriate moral decision is commendable and has a positive effect on reputation. A reputable company is expected to take responsible decisions and ensure their corporate representations uphold the law. Company policies and protocols should reflect the required laws binding on them and the standard of their ethical behavior [1]. The International Financial Reporting Standards (IFRS) state the standard requirements for a financial report. IFRS is the required reporting standard in Nigeria, issued by the International Accounting Standard Board (IASB) and enforced by the Financial Reporting Council of Nigeria (FRC). In Nigeria The Companies and Allied Matters Act (CAMA), Securities and Exchange Commission (SEC) have financial reporting requirements for companies and the Central Bank of Nigeria has financial reporting requirements for banks in Nigeria
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