VALUE RELEVANCE OF ENVIRONMENTAL SUSTAINABILITY REPORTING: EVIDENCE FROM LISTED CONSUMER GOODS FIRMS IN NIGERIA AND GHANA

Abstract

With the continuous rise in global warming, preparers of accounting reports are seeking for more environmentally responsive firms. As such, for such firms to be more value relevant, they must be environmentally responsive. Succinctly, the paper examined the value relevance of environmental sustainability reporting of listed consumer goods firms in Nigeria and Ghana. The various environmental sustainability proxies considered are: Gas flaring emission, energy consumption, and environmental review while value relevance was measured by market value. The study adopted the longitudinal research design. The study sourced data from 13 consumer goods firms in Nigeria out of the 21 consumer goods firms recorded as at 31st of December, 2022 and 7 consumer goods firms in Ghana out of the 10 consumer goods firms recorded as at 31st of December, 2022. The data spanned from 2013 to 2021 as stated in the Global Reporting Initiative (GRI). The study thus reported that, GAS flaring emission (coef. =0.310598 & p-value=0.0000, & energy consumption (Coef=0.450582; & p-value=) 0.0209 both exerted positive significant effect on market value (MAV). However, environmental review (Coef.=0.011167; & p-value =0.7019) is still not value relevant. Hence, the paper concludes that, GAS flaring emission and energy consumption are value additive. Consequently, adequate laws should be put in place to compel oil firms to invest more on disclosure of the volumes of gas emission into the ozone layer. Lastly, all commitments aimed at preserving the natural environment must be properly documented in the financial statement by way of environmental disclosure.
 Keywords: Value Relevance, Environmental Sustainability Performance, environmentally Responsive, Gas Flaring Emission.