Environmental Accounting Costs and Financial Performance of Selected Quoted Oil and Gas Companies in Nigeria

Abstract

The focus of this study is to examine the effects of environmental accounting costs on the financial performance of selected quoted oil and gas firms in Nigeria. To achieve this objective, Secondary source of data was used in the study and sourced through Nigeria exchange group and companies’ annual report of Conoil, MRS Oil and Forte Oil covering the period of 21years (2000-2020). The study adopted both the descriptive and inferential statistics in analyzing the panel data and in order to empirically investigate the effect of the explanatory variables on the dependent variable, multiple regression model involving ordinary least square method was used to test hypotheses formulated. Results from the regression indicate that environmental internal failure cost and environmental external failure cost have a positive and significant effect on the financial performance of oil and gas companies in Nigeria, while, Environmental pollution prevention costs and environmental detection costs revealed an insignificant effect on the financial performance of oil and gas companies in Nigeria. The Implications of these results are that, if the variables are not identified and improved upon, the challenges facing environmental accounting costs on the financial performance of the companies may persist and may lead to sub optimal performance and failed vision. Thus, the study concluded that the environmental accounting costs have significantly affected the general financial performance of oil and gas industry in Nigeria. The study therefore recommends that the management of petroleum companies should continue to put funds on internal failure cost to ensure continuous reduction of contaminants in the environment to an amount that complies with environmental standards.