The increasing concern about environmental degradation, resources depletion, resources scarcity, environmental degradation and the sustainability of economic activity have made the development of Environmental accounting an area of interest. Adequate research is not carried out to effectively determine what environmental accounting is truly about and whether or not it has an impact on the corporate performance of quoted manufacturing firms. The study evaluated the effect of environmental accounting on profitability of quoted companies in the Nigerian Manufacturing Sector.
The study employed the ex post facto research design. The population of the study consisted of the quoted manufacturing companies in Nigeria made up of 71 companies as at 31st December, 2017 according to Nigeria Stock Exchange (NSE) which formed the entire population of the study. The study employed the convenience sampling in selection of the sampled companies. Data from the research were obtained from the annual reports of the sampled companies. The study adopted descriptive and inferential statistics.
The results showed that environmental cost had no significant relationship on return on assets with p-value (0.9615 < 0.05), the controlling effect of firm size and age in relation to environmental cost has a significant effect on return on assets with p-value (0.100274 > 0.05), environmental cost had no significant relationship on return on equity with p-value (0.4721 < 0.05) and the controlling effect of firm size and age in relation to environmental cost has a significant effect on return on equity with p-value (0.032359 < 0.05).
The study concluded that environmental accounting had no significant effect on profitability of quoted companies in the Nigerian Manufacturing Sector while the controlling effect of firm size and age in relation to environmental cost has a significant effect on profitability of quoted companies in the Nigerian Manufacturing Sector with an exception of return on assets. The study recommended that management should ensure that investors make investment in the company and the companies should not only look at environmental accounting as an expense but as an investment.
Keywords: Environmental cost, Environmental accounting, Firm age, Firm size, Profitability, Return on assets and Return on equity.
TABLE OF CONTENTS
Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgement v
Abstract vi
Table of Contents vii
List of Tables viii
CHAPTER ONE: INTRODUCTION:
Background to the Study 1
Statement of the Problem 4
Objectives of the Study 7
Research Questions 7
Research Hypotheses 7
Significance of the Study 8
Scope of the Study 9
Operationalization of Variables 10
Operational Definition of Key Terms 11
CHAPTER TWO: LITERATURE REVIEW
2.1. Conceptual Review 13
2.1.1. Environmental Accounting 13
2.1.2. Forms of Environmental Accounting 15
2.1.3. Scope of Environmental Accounting 15
2.1.4. Objectives of Environmental Accounting 16
2.1.4.1 Reasons for the development of Environmental Accounting 16
2.1.5. Accounting Interest in the Environment. 16
2.1.6. Limitations of Environmental Accounting 18
2.1.7. Reasons Why Companies should report Environmental Activities in Nigeria 18
2.1.8. Environmental Accounting Approaches 19
2.1.8.1. Environmental Costs 19
2.1.9. ISO 14000 20
2.2. Financial Performance 21
2.2.1. Measurement of Financial Performance 22
2.2.2. Relationship between Environmental Accounting and Firm Profitability 23
2.2.3. Other Determinants of Environmental Reporting in Nigeria 24
2.4. Theoretical Review 26
2.4.1. Stakeholder Theory 26
2.4.2. Legitimacy Theory 28
2.4.3. Positive Accounting Theory 29
2.4.4. Institutional Theory 29
2.4.5. Accountability Theory 31
2.4.6. Theoretical Framework 32
2.5. Empirical Review 32
2.6. Gaps in the Literature. 53
2.7. Researcher’s Conceptual Framework 54
CHAPTER THREE: RESEARCH METHODOLOGY
3.1. Research Design 55
3.2. Population of the Study 55
3.3. Sample size and Sampling Technique 55
3.4. Method of Data Collection 56
3.4.1 Research Instrument 56
3.4.2. Validity of Research Instrument 56
3.5. Method of Data Analysis 57
3.6. Model Specification and Measurement of Variables 57
3.7. Model Evaluation and Test of Significance 59
3.8. Apriori Expectation 59
3.9. Ethical Consideration 59
CHAPTER FOUR: DATA ANALYSIS, RESULTS AND DISCUSSION OF FINDINGS
4.1. Descriptive Statistics and Pre-Estimation Test 61
4.1.1. Descriptive Statistics 61
4.1.2. Pre-Estimation Test 64
4.1.2.1. Unit-root test 64
4.2. Testing of Hypotheses and Analysis 65
4.2.1. Testing of Hypothesis One 65
4.2.2. Testing of Hypothesis Two 67
4.2.3. Testing of Hypothesis Three 69
4.2.4. Testing of Hypothesis Four 72
4.3. Discussion of Findings 74
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1. Summary of the whole study 77
5.2. Summary of Findings 78
5.2.1. Theoretical Findings 78
5.2.2. Empirical Findings 78
5.3. Conclusion 80
5.4. Recommendations 80
5.5. Contribution to Knowledge 81
5.6. Suggestions for Further Study 82
REFERENCES 83
APPENDIX 93
