Sustainability Reporting and Financial Performance of Oil and Gas Companies Listed in Nigeria

Abstract

“Financial performance (FP) is a subjective measure of how well a firm can use assets from its primary mode of business and generate revenues. The term is also used as a general measure of a firm’s overall financial health over a given period.” A company’s financial performance refers to its health as a whole and the money it makes from its operations. Allocating resources effectively to meet objectives and boost profits is at the heart of this practice. The integrity of Nigeria’s oil and gas data relies on it completely. The sustainability of oil and gas in Nigeria is becoming questionable due to environmental factors that were not properly accounted for, and this prompted the researcher of this study to zero in on the effect of corporate social responsibility on the bottom lines of Nigeria’s publicly traded oil and gas firms. This study used an ex-post facto method for its research, using data from secondary sources such as annual reports and the Nigerian stock market. Inadequate CSR reporting and a failure to adequately reflect the financial performance of listed oil and gas firms have been noted in numerous works of literature. Using panel data analysis, the research correlated CSR reporting with the profitability indicators return on assets (ROA), return on equity (ROE), and return on capital employed (ROCE) of publicly traded oil and gas firms. This study looks at 10 Nigerian oil and gas firms that are traded on public markets. A filter was used with a census sampling strategy. Firms that (1) were permitted to trade before January 1, 2010, or (2) are still listed as of December 31, 2020 are eligible for review. In addition, the organization must publicly disclose yearly reports pertinent to the time under investigation. As a result of not meeting these criteria, four of the original eight firms were eliminated. Secondary sources were consulted to get the data needed. EViews 10, a statistical programme, was used to analyze the data for this research. The regression analysis showed that CSR reporting increases ROA by a small but favourable amount. The return on equity, however, was shown to be positively correlated with environmental sustainability. Finally, a statistically insignificant positive correlation was found between social sustainability and return on investment (ROI). Therefore, this study concludes, based on the data provided, that sustainability reporting significantly affects the company’s financial performance for listed oil and gas businesses in Nigeria. Based on the findings of this study, oil and gas companies in Nigeria should make public disclosure of their sustainability efforts a top priority if they want to improve their bottom lines. Compliance in the industry as a whole can be improved if policymakers and standard-setting organizations work together to make it easier for industries to design and execute sector-specific reporting regulations.