Abstract
The objective of this study was to ascertain the effect of environmental cost disclosure on profitability of oil and gas firms listed on Nigeria Stock Exchange between 2010 and 2019. Eleven (11) listed oil and gas firms were purposively sampled. The proxies for environmental cost disclosure include waste management cost disclosure, employee health and safety cost disclosure and environmental remediation cost, while net profit margin was employed as profitability measure. Content analysis was employed while Pearson Correlation Coefficient and Panel Least Square (PLS) Regression analysis via STATA 13 statistical software were used to test the hypotheses of the study. The result of this study showed that waste management cost disclosure, employee health and safety cost disclosure and environmental remediation cost disclosure have a significant positive effect on net profit margin at 5% level of significance respectively. This study therefore recommends inter alia that since environmental cost is value relevant in making strategic business decision. Thus, oil and gas firms should constantly reposition their accounting system in order to provide information on environmental cost so that the true costs in an organization can be ascertained and properly allocated.
Highlights
The use of natural resources and continuous emissions of greenhouse gases by industries around the world are on increase
In order to resolve the obvious research gap left by the literature in terms of inconclusive outcomes from previous similar studies, to uncover specific and novel evidence that may account for the variability in earlier study outcomes, this study focused on upstream oil and gas companies in Nigeria from 2010-2019; generating three different explanatory data sets
Ho2: Employee Health and Safety Cost Disclosure has no significant effect on Net Profit Margin of Oil and Gas Companies listed on Nigeria Stock Exchange
Summary
The use of natural resources and continuous emissions of greenhouse gases by industries around the world are on increase. Industrialization which required the use of natural resources including energy brought about factory pollutant and greater land use, which harmed the natural environment. This is evidenced in environmental degradation and atmospheric pollution generally experienced in the world and in Nigeria today. The search for sustainability has made various global institutions to set out policies that guide human interaction with the environment These guidelines have great effect on corporations, as they are made to understand that their business strategies affect the society, can influence behaviour and disorganize the physical, social and economic environment (Ezeokafor & Amahalu, 2019)
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