The Influence of Corporate Governance on Environmental Disclosure of Listed Non-Financial Firms in Nigeria

Ndubuisi Odoemelam,Regina Okafor

doi:10.28992/ijsam.v2i1.47

Abstract

The study investigates the influence of corporate governance on environmental disclosure of non-financial firms listed in Nigeria Stock Exchange (NSE), anchoring on “trinity theory” (agency, stakeholder and legitimacy theories). 86 firm-year observations across 86 companies listed in Nigeria Stock Exchange (NSE) using content analysis, cross-sectional data, OLS regression techniques were used to analyze the influence of board characteristics on the extent of overall environmental disclosure (OED). The results show that board independence, board meeting and the environmental committee were statistically significant while audit committee independence and board size were insignificant. Among the three company attributes used to mitigate spurious result only Firm size significantly influence the quantity of overall environmental disclosure of the sample companies. Auditor type “big 4” (Ernest Young, Deloitte, KPMG and PWC) and industry membership show insignificant relation to environmental disclosure. The findings indicate that the level of environmental disclosure of nonfinancial companies in Nigeria is quite insufficient at an average of 10.5 %. It is not surprising that environmentally sensitive industry and auditor type had no significant influence on the extent of environmental disclosure. This buttress the point that the environment the companies operate is institutionally and legally weak. Hence it calls for improvement on environmental law and implementation as well as harmonized environmental reporting infrastructure and standard to aid comparison.

Highlights

The dynamic nature of the environment and its associated cost to humanity has generated concerns of stakeholders (Jones et al, 2017; Rokhmawati & Gunardi, 2017; Rokhmawati et al, 2017) in search of ways of ameliorating the adverse impact of activities of various companies; emphasizing the need for environmental impact assessment and reporting (Ghani et al, 2018)
We accept the hypothesis that states that there is a significant relationship between corporate governance and corporate environmental disclosure made by non-financial listed companies operating in Nigeria
The results provided evidence as firstly hypothesized that corporate governance has a statistically significant relation (F = 10.128, P = 0.000) with the overall environmental disclosure made by non-financial listed companies operating in Nigeria

Summary

Introduction

The dynamic nature of the environment and its associated cost to humanity has generated concerns of stakeholders (Jones et al, 2017; Rokhmawati & Gunardi, 2017; Rokhmawati et al, 2017) in search of ways of ameliorating the adverse impact of activities of various companies; emphasizing the need for environmental impact assessment and reporting (Ghani et al, 2018). Some scientific studies have revealed the potentially harmful effect of corporate activities on the environment. The study of Wilson et al (2011) shows that automated teller machines, computer keyboards, telephones, handsets, hospital beds, rails, doors handle, Odoemelam and Okafor currency notes are transmission agents of microorganisms. An increase in multinational and domestic food companies and its related potential negative environmental health impact (Akbas, 2016; Igumbor et al, 2012; Khoiruman & Haryanto, 2017). There are other ecological damage and natural resources depletion (Li et al, 2015; Yu et al, 2016)

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Conclusion