Sustainability Reporting and Financial Performance of Deposit Money Banks in Nigeria

Okolie, O Augustine,Igaga, A Collins

doi:10.22158/ibes.v2n2p68

Abstract

This study examines how sustainability reporting is useful for assessing the financial performance of listed Deposit Money Banks in Nigeria. Specifically, the study focuses on the economic, environmental and social dimensions of sustainability reporting using “Return on Assets”, “Return on Equity” and “Earnings per Share” as proxies for financial performance of Deposit Money Banks in Nigeria from 2012 to 2018. The sample of the study was restricted to seventeen deposit money banks out of twenty one Banks quoted on the Nigerian Stock Exchange as at December, 2018. The required data were collected from audited annual financial statements and “sustainability reports” of the selected Deposit Money Banks for the period. A detailed analysis of the three bottom lines of profit (economic), people (social) and planet (environmental) impact was conducted. The descriptive and least squares regression analysis were adopted for the study considering the banks’ sustainability reporting practices against the selected performance proxies. The study concludes that sustainability reporting practices of Banks in Nigeria have substantial impacts on the financial performances of Deposit Money Banks in Nigeria. The study recommends that enabling legislations should be put in place to mandate enhanced sustainability practices among all deposit money banks in Nigeria as well as facilitate meaningful evaluation and measurement of earnings, social and environmental impacts in all areas of bank operations in Nigeria.

Highlights

Optimizing shareholders’ interest has traditionally dominated the corporate strategy of many organizations including Deposit Money Banks across the world
The study examines: a) the impact of the three dimensions of corporate sustainability on the financial performance of Deposit Money Banks in Nigeria; b) the impact of corporate sustainability reporting on Return on Equity (ROE) of Deposit Money Banks in Nigeria; c) the extent to which corporate sustainability reporting affect Return on Assets (ROA) of Deposit Money Banks in Nigeria; and d) the effect of corporate sustainability reporting on Earnings Per Share (EPS) of Deposit Money Banks in Nigeria
Literature Review Literature in this study considers the conceptual and theoretical frameworks of the study as well as a review of prior empirical evidences related to the study. 3.1 Conceptual Framework of Sustainability Reporting The concept of sustainable development creation by Brundtland committee in 1987 is primarily aimed at and formulated to mean the engagement of an entity in activities that meet the needs of the contemporary society or generation without denying or obstructing future generation the opportunity of securing their own needs (Zyadar, 2016)

Summary

Introduction

Optimizing shareholders’ interest has traditionally dominated the corporate strategy of many organizations including Deposit Money Banks across the world. Companies require strong governance and workplace practices that recognize environmental and social needs of current and future stakeholders for it to achieve long term sustainability. Recognizing and incorporating such social and environmental factors into the governance and strategic operations of the firm is referred to as Corporate Sustainability (CS). The argument as to whether or not there is a nexus between company’s engagement in sustainability practices and firm performance has dominated the literature This perhaps could be attributed to the fact that most organizations’ activities have engendered a lot of environmental concerns among stakeholders. The study examines: a) the impact of the three dimensions of corporate sustainability on the financial performance of Deposit Money Banks in Nigeria; b) the impact of corporate sustainability reporting on Return on Equity (ROE) of Deposit Money Banks in Nigeria; c) the extent to which corporate sustainability reporting affect Return on Assets (ROA) of Deposit Money Banks in Nigeria; and d) the effect of corporate sustainability reporting on Earnings Per Share (EPS) of Deposit Money Banks in Nigeria

Objectives

Methods

Findings

Discussion

Conclusion