Social And Environmental Responsibility Accounting Practices and Market Value Of Quoted Oil And Gas Firms In Nigeria

Okafor Uchenna Israel ,Daferighe Emmanuel Emeakponuzo ,Eyo Victor Mfon

doi:10.7176/ejbm/13-12-07

Abstract

Engaging in social and environmental activities as core components of CSR is rapidly growing as one of globally acceptable best practices for sustainability in business. Beyond their acclaimed societal benefits, the specific implication of social and environmental responsibility accounting practices (SERAP) on the economic performance of business entities is still a debate in many territories and industries. Therefore, the main objective in this study is to determine the nexus between SERAP and financial performance of quoted oil and gas firms in Nigeria. Whereas the measures of SERAP are environmental protection costs (EPC), community education and training costs (CETC), and community health related costs (CHRC), the proxy for financial performance is the market value of firms. Adopting ex post facto research design and modified Ohlson 1995 share price model, the general model demonstrated insignificant positive adjusted R-square. As all the P-values are not statistically significant, the unstandardised coefficients for EPC, CETC, and CHRC reveal a mix of positive and negative insignificant indices at varying extents. It was concluded that the level of SERAP by oil and gas firms in Nigeria did not significantly influence their capital market valuation. While the researcher further inferred that social and environmental public concerns rank as the primary responsibility of the government which receives taxes from business entities, oil and gas companies may cautiously engage in SERAP to avert financial losses through restiveness and agitations from some disgruntled stakeholders. More so, as ethical practices for promoting their going concern philosophy is mainly attainable within a wholesome planet and healthy people. Keywords: Social and Environmental responsibility Accounting Practices (SERAP), environmental protection costs, community education and training costs, community health related costs, Capital Market performance, Value of Oil and Gas Companies. DOI: 10.7176/EJBM/13-12-07 Publication date: June 30 th 2021

Highlights

Social and Environmental Responsibility Accounting Practices (SERAP) is a description for all the accounting activities that promote and report the social and environmental obligations of business entities alongside their conventional economic activities
social and environmental responsibility accounting practices (SERAP) tends to establish interdependencies between social and environmental risks in terms of costs and possible business opportunities. These practices are originally found within the domain of “not for profit organisations”; its emergence among profit-oriented organisations though not without some controversies is attracting worldwide attention and creating a significance in the global economy. While this increasing interests in SERAP in the recent years may have resulted from globalization and complex international business activities accompanied by stakeholders’ demands for www.iiste.org enhanced cor porate transparency and accountability (Jamali & Mirshak 2007); th e cont rove rsies ma y no t be un conn ected to t he difficulties in measuring negative externalities arising from activities of corporate entities as well as the argument surrounding Corporate Social Responsibility (CSR)’s ability to contribute to the profit objective of business entities
Whereas the determinants for SERAP in this study are absolute figures for environmental protection costs (EPC), community education and training costs (CETC), and community health related costs (CHRC) incurred in the CSR programmes of firms operating in the oil and gas sector, the proxy for measuring financial performance is the value of quoted firms in the sector

Summary

Introduction

Social and Environmental Responsibility Accounting Practices (SERAP) is a description for all the accounting activities that promote and report the social and environmental obligations of business entities alongside their conventional economic activities. SERAP tends to establish interdependencies between social and environmental risks in terms of costs and possible business opportunities These practices are originally found within the domain of “not for profit organisations”; its emergence among profit-oriented organisations though not without some controversies is attracting worldwide attention and creating a significance in the global economy. The current objective of empirically investigating the nexus between social and environmental responsibility accounting practices (SERAP) and performance measured by value of quoted oil and gas firms in Nigeria. Whereas the determinants for SERAP in this study are absolute figures for environmental protection costs (EPC), community education and training costs (CETC), and community health related costs (CHRC) incurred in the CSR programmes of firms operating in the oil and gas sector, the proxy for measuring financial performance is the value of quoted firms in the sector

Methods

Results

Discussion

Conclusion