Corporate Social Sustainability Reporting and Financial Performance of Oil and Gas Industry in Nigeria

Erhirhie Felix Erhinyoja

doi:10.11648/j.ijafrm.20190402.12

Abstract

This study examined corporate social sustainability reporting and financial performance of Oil and Gas Industry in Nigeria. Issues regarding corporate sustainability have gained global relevance in recent times owing to the increasing awareness that activities of most organizations may have adverse implicational effects on the ecosystems, societies, and environments of the future. Thus, companies are now being required to extend their strategic policies and information reportage to encompass sustainability reporting practices in order to meet the environmental and social needs of both current and future stakeholders. It is on this light that this study was set out to examine the effect of sustainability reporting on the financial performance of listed oil and gas companies in Nigeria. This study assessed the effect of corporate social sustainability reporting on Return on Assets, Return on Equity, and Return on Capital Employed of oil and gas companies listed on the Nigeria Stock Exchange. Ten oil and gas companies were sampled for the study. The study utilized secondary data collected via financial ratios and accounts of the individual companies and content analysis. The findings showed that social sustainability reporting exerts negative effect on all three performance proxies, howbeit only its effect on return on equity was statistically significant. The study recommends, among others, that existing sustainability reporting standards should be aligned to reflect country-specific social and environmental challenges, while its implementation should rather be obligatory rather than voluntary.

Highlights

Maximizing shareholders’ interests have traditionally dominated the corporate strategy of many organizations in time past
On the percentage of the variations in Return on Assets (ROA), Return on Equity (ROE) and Return of Capital Employed (ROCE) that was accounted for by the two sustainability proxies taken together, the result showed a total of 12.2%, 8.1% and 12.4% respectively for each of the three models
While SOCP effect on ROA and ROCE are statistically insignificant, its effect on ROE passed the significant test at 5% levels due to its (SOCP) probability value of 0.01 in model two

Summary

Introduction

Maximizing shareholders’ interests have traditionally dominated the corporate strategy of many organizations in time past. Happenings in the last decade, such as concerns on global warming and the likes, demand that since the activities of most business organizations may have adverse environmental degradation effect on humans and its environments, companies may need to soft-pedal on the narrow version of classical economic theory and embrace sustainable corporate strategies that include goals that go beyond just maximizing shareholders’ interest [1]. Companies require strong governance and workplace practice that recognizes environmental and social needs of current and future stakeholders for it to achieve long term sustainability. PricewaterhouseCoopers stated that recognizing and incorporating such social and environmental factors into the governance and strategic operations of the firm is referred

Objectives

Methods

Results

Conclusion