Impact of Sustainability Reporting on Financial Performance of Selected Quoted Companies in Nigeria
CHAPTER ONE
Objectives of the Study
The main objective of the study is to empirically assess the impact of sustainability reporting on the financial performance of selected quoted companies in Nigeria.
The specific objectives of the study are:
- To investigate the impact of expenditure on economic activities on the financial performance of selected quoted companies in Nigeria.
- To assess the impact of expenditure on social activities on the financial performance of selected quoted companies in Nigeria.
- To evaluate the impact of expenditure on environmental activities on the financial performance of selected quoted companies in Nigeria.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
The purpose of this section is to make an extensive review of relevant literature in respect to the concept of sustainability reporting as well as financial performance. It also consist a theoretical review as well as the review of relevant empirical literature. Sustainability report is a term used to describe reports on the economic, environmental and social impacts of companies, in which the positive and negative impact of the company are described clearly (Atu, 2013). It is an intensive effort to include social, economic and environmental parameters in the evaluation and decision-making process of the reporting entity (Amacha & Dastane, 2017). Therefore, the concept of SR has been proposed to assess and disclose these business impacts of organizations in addition to traditional accounting reports (Atu, 2013). Kowal and Kustra (2016) believed that SR is a source of information on the effectiveness of companies in the non-financial spheres related to economic, environmental and social efficiency. The information disclosed in the above areas is able to fill the information gap due to the limitations of the standard financial statements, which focus on the tangible assets of the companies and the resulting financial transactions. However, this information gap is the reason for the underestimation of the stable value of the stakeholders. Therefore, closing this gap and Proper valuation of value for stakeholders should be based on both financial and non-financial statements in the form of SR. Companies must ensure or maintain performance based on economic, environmental and social dimensions of sustainability (GRI, 2013). Asuquoa et al. (2018) argued that the expectations of all firms are to be transparent about the way they manage their environment, how they handle governance issues, as well as the treatment given to their employees, and how they manage their host communities. Sustainability seeks to focus on how to organize and coordinate human activities so as to satisfy physical and psychological needs without hindering the ecological, social or economic basis that allows these needs to be met. Unerman et al. (2007) emphasized that the responsibility for social, ecological and economic performance has increased among organizations. The SR of a company can affect its financial performance, this implies that the larger the company in terms of SR expression, the greater it’s FP (Fuadah et al., 2019). Dobre et al. (2015) suggested that publicly traded companies understand that reporting on financial performance alone is not sufficient to achieve sustainable growth.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine impact of sustainability reporting on financial performance of selected quoted companies in Nigeria. Selected quoted companies in Lagos form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
TEST OF HYPOTHESIS
H01: Expenditure on economic activities has no significant impact on the financial performance of selected quoted firms in Nigeria.
H02: Expenditure on social activities has no significant impact on the financial performance of selected quoted firms in Nigeria
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain impact of sustainability reporting on financial performance of selected quoted companies in Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of sustainability reporting on financial performance of selected quoted companies in Nigeria
Summary
This study was on impact of sustainability reporting on financial performance of selected quoted companies in Nigeria. Three objectives were raised which included To investigate the impact of expenditure on economic activities on the financial performance of selected quoted companies in Nigeria, to assess the impact of expenditure on social activities on the financial performance of selected quoted companies in Nigeria and to evaluate the impact of expenditure on environmental activities on the financial performance of selected quoted companies in Nigeria. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from selected quoted companies in Lagos. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
This study was carried out to determine the effect of sustainability reporting on financial performance of quoted industrial goods companies in Nigeria. This study employed both content analysis and ex-post facto research design. The drivers for sustainability reporting are environmental reporting, social reporting and economic reporting, while financial performance was measured with cash value added. The results of the study also support both theoretical and empirical evidence of prior studies that showed significant positive effect of sustainability reporting on financial performance of firms in Nigeria at 5% level of significance.
Recommendation
There should be a promotion of environmental policies through direct regulations to encourage energy/resource savings through innovations in technology and management, thereby reducing the cost of environmental measures, in general and also stimulating improvements in value-added.
There should be information-based instruments of environmental policy to encourage information disclosure by firms which would leads to a favourable reception of the firm by other firms, clients and consumers, and raise the market value of its management as a whole.
Government agencies should give tax credit to organisations that comply with the economic laws of the land which will encourage economic reporting and enhancement of performance.
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