EFFECT OF ENVIRONMENTAL COST ON FINANCIAL PERFORMANCE OF SELECTED OIL AND GAS FIRMS IN NIGERIA

Authors

  • Dr. Uzoh Nzekwe E. Department of Accountancy, Madonna University, Nigeria

Keywords:

Pollution Cost, Remediation Cost, Protection Cost, Recycling Cost

Abstract

This study evaluates the effect of environmental cost on financial performance of selected oil and gas firms in Nigeria. Specifically, the study examined the effect of environmental pollution prevention cost, environmental protection cost, environmental remediation cost, and environmental recycling cost. Data for the study was generated from the content analysis of firms annual reports for the ten years period (2009 – 2018). The data collated were subjected to inferential statistical analysis using the statistical package for social science, version 20. Among the findings is that the annual report of oil and gas firms in Nigeria does not contain environmental operating costs; and that pollution prevention cost, environmental protection cost, environmental remediation cost, and environmental recycling cost have positive effect on firms financial performance. However, multiple regression analysis corroborated cumulative positive and significant effect of the predictors on firm’s financial performance. It is evident therefore, that non-inclusion of the aforementioned environmental cost characteristics, negates the rules guiding General Accepted Accounting Principles. This supports the argument that a true and fair view of the annual reports cannot be guaranteed;  moreso, the non provision of fund as expense from the revenue generated to mitigate the hardship the host communities has been subjected to has given rise to several agitation, one of which resulted to the death of Sarowiwa and eight others. Consequently, we recommend that oil and gas firms should include the above environmental costs in their annual reports, particularly as the world is embracing green initiative as a global village. 

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Published

2022-12-17

How to Cite

Uzoh, N. E. (2022). EFFECT OF ENVIRONMENTAL COST ON FINANCIAL PERFORMANCE OF SELECTED OIL AND GAS FIRMS IN NIGERIA. Advance Journal of Management, Accounting and Finance, 7(12). Retrieved from https://aspjournals.org/ajmaf/index.php/ajmaf/article/view/37

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