The Nexus Between Firm Characteristics and Environmental Accounting Disclosure of Listed Industrial Goods Companies in Nigeria: A Casuality Approach

Abstract

This study examined the effect of firm characteristics on environmental accounting disclosure of listed industrial goods companies in Nigeria. The specific objectives were to examine the effect of firm characteristics on environmental policy and governance disclosure, and on energy and resource usage disclosure. The study adopted an ex-post facto research design using secondary data extracted from the annual reports of 10 listed industrial goods companies over a 10-year period (2016–2025), yielding 100 firm-year observations. Environmental accounting disclosure was measured across four dimensions: environmental policy and governance, energy and resource usage, emissions and pollution control, and waste management practices. Firm characteristics were proxied by firm size (natural logarithm of total assets), firm profitability (return on assets), firm leverage (debt-to-equity ratio), and firm age (years since incorporation). Panel regression analysis was employed, with Hausman and Breusch-Pagan tests guiding model selection. The study was anchored on Agency Theory, complemented by Stakeholder and Legitimacy Theories. The findings revealed that firm size (β = 0.042, p < 0.01) and profitability (β = 0.218, p < 0.05) had significant positive effects on environmental policy and governance disclosure, while leverage (β = - 0.042, p > 0.05) was insignificant, and firm age (β = 0.002, p < 0.10) was marginally significant. Similarly, firm size (β = 0.038, p < 0.01) and profitability (β = 0.198, p < 0.05) significantly influenced energy and resource usage disclosure, with leverage (β = -0.038, p > 0.05) being insignificant and firm age (β = 0.002, p < 0.10) marginally significant. The study concluded that firm size and profitability are the most consistent and significant determinants of environmental accounting disclosure among listed industrial goods companies in Nigeria. The study recommended that the Financial Reporting Council of Nigeria should mandate minimum environmental disclosure requirements for listed industrial goods companies, and industry associations should establish environmental reporting assistance programs to support firms in improving their disclosure practices.