Assessment of the Impact of Environmental Operating Costs on Return on Assets: Evidence from Listed Breweries in Nigeria

This study examines the effect of environmental operating costs on the return on assets of consumer goods firms: evidence from listed breweries industries in Nigeria. Specifically, the study sought to evaluate the effect of prevention costs, appraisal costs and external failure costs on the return on assets of the selected manufacturing firms. The population for this study consists of 21 Consumer goods listed on Nigeria exchange group (NGX). The study made use of purposive sampling to select four (4) breweries companies operating in Nigeria spanning for 10 years (2014-2023). A panel data regression approach was utilized to scrutinize the information collected from four selected businesses. Both descriptive and inferential methodologies were employed in the analysis. The regression analysis indicated a regression coefficient of PC at -0.9376, accompanied by a t-value of -5.2179 and a significance level (p-value) of 0.0000 (p<0.05) which indicate a significant inverse relationship between prevention costs and the return on assets for the evaluated companies. In the case of ACST, the regression coefficient stands at 17.1978, with a t-statistic of 1.8009 and a p-value of 0.0801 indicates that the influence of ACST on return on assets is not statistically significant at the 5% level. Also, the regression coefficient for external failure costs is -29.6962, paired with a p-value of 0.0376 (p<0.05). Regression analysis revealed that, after controlling for all variables, prevention and external failure costs had significant negative effects on ROA, while appraisal cost had a positive but statistically insignificant effect. The study concludes that prevention expenses significantly affect returns on assets. It also indicated that appraisal costs do not show any statistically meaningful impact on returns on assets. Additionally, it highlighted that external failure costs negatively influence the return on assets of the chosen companies. The study recommends among others that firms should keep a close eye on the costs related to prevention, appraisal and external failures in order to evaluate the effectiveness of their quality management practices.

Environmental operating costs, prevention costs, appraisal costs, external failure costs, return on assets.

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