IMPACT OF ENVIRONMENTAL REPORTING ON NIGERIAN LISTED FIRMS: THE MODERATING ROLE OF FINANCIAL CONSTRAINTS

Abstract

Environmental reporting in present days still remains a contentious issue in the business cycle. Over the years, firms have adopted diverse ways to improve on their environmental practices. The broad objective of this study is to empirically examine the impact of environmental reporting on Nigerian listed firms. The study also examines the moderating effect of financial constraints on environmental reporting practices of listed Nigerian firms. The sample consist of 352 observations of non-financial firms listed on the Nigerian Exchange group from 2016-2020. The study utilizes the firm’s annual reports as its instrument of data collection. The statistical analysis of data for the study is conducted using STATA 13.0. The fixed effect was used based on the results of the Hausman test. The study discovered that environmental reporting has significant and negative impact on environmental reporting on stock return, signifying that investors do not give much consideration to environmental reporting when valuing stock. Also, the results propose that the negative impact on the stock return is more evident in firms having financial constraints. This study recommends that management of firms should reflect environmental sustainability practices as a way of enhancing the reputation of the firm and attracting investors.