International Journal of Research and Innovation in Social Science (IJRISS) |Volume VI, Issue X, October 2022|ISSN 2454-6186

Environmental Accounting Costs and Financial Performance of Selected Quoted Oil and Gas Companies in Nigeria

Okere Obinna Cletus PhD¹, Prof. S.C Nwite PhD², AGANA Ogagaoghene John, PhD, ACA^3
1Department of Accountancy, Faculty of Management Sciences, Ebonyi State University, Abakaliki, Nigeria.
²Department of Banking, Ebonyi State University, Abakaliki, Nigeria
³Department of Accountancy, Ebonyi State Univesity, Abakaliki, Nigeria

Abstract: The focus of this study is to examine the effects of environmental accounting costs on the financial performance of selected quoted oil and gas firms in Nigeria. To achieve this objective, Secondary source of data was used in the study and sourced through Nigeria exchange group and companies’ annual report of Conoil, MRS Oil and Forte Oil covering the period of 21years (2000-2020). The study adopted both the descriptive and inferential statistics in analyzing the panel data and in order to empirically investigate the effect of the explanatory variables on the dependent variable, multiple regression model involving ordinary least square method was used to test hypotheses formulated. Results from the regression indicate that environmental internal failure cost and environmental external failure cost have a positive and significant effect on the financial performance of oil and gas companies in Nigeria, while, Environmental pollution prevention costs and environmental detection costs revealed an insignificant effect on the financial performance of oil and gas companies in Nigeria. The Implications of these results are that, if the variables are not identified and improved upon, the challenges facing environmental accounting costs on the financial performance of the companies may persist and may lead to sub optimal performance and failed vision. Thus, the study concluded that the environmental accounting costs have significantly affected the general financial performance of oil and gas industry in Nigeria. The study therefore recommends that the management of petroleum companies should continue to put funds on internal failure cost to ensure continuous reduction of contaminants in the environment to an amount that complies with environmental standards.

Keywords: environmental internal failure cost, environmental external failure cost, Environmental pollution prevention costs, environmental detection costs, return on equity

I. INTRODUCTION

Financial performance is a major key in all economic decision making relating to public and private companies to identify the difficult and hidden cost (Chashim & Fadaee 2016). Financial performance is a quantitative ration of how well a firm uses assets from its business operations and generate revenues. The Financial performance is also seen as a measure of a firm’s overall financial health over a given period of time. According to Grant (2003), the most frequently used ratio for shareholder wealth creation has been total returns to shareholders but this method was faulted by