Sustainability Disclosures and Financial Performance of Listed Oil and Gas Firms in Nigeria

Abstract

Despite the increasing global emphasis on sustainability and the growing pressure on Nigerian oil and gas companies to embrace sustainability reporting, sustainability disclosure is not fully embraced in Nigeria. The main objective of this study therefore was to examine the effect of sustainability disclosures on the financial performance of listed oil and gas firms in Nigeria. The independent variable, sustainability disclosures, was proxied by environmental sustainability disclosure, social sustainability disclosure and economic sustainability disclosure while the dependent variable, financial performance, was proxied by return on equity (ROE). The research design adopted for this study was ex post facto, secondary data were used and the population of the study was 9 listed oil and gas firms in Nigeria while the sample of 6 companies was purposively selected. The data were analyzed using ordinary least square regression analysis and the statistical package employed was STATA version 17. The findings of the study revealed that environmental sustainability disclosure (coeff. = - 2.024[0.068]) has no significant effect on return on equity; social sustainability disclosure (coeff. = 0.582[0.005]) has a significant positive effect on return on equity; economic sustainability disclosure (coeff. = -0.162[0.652]) has a statistically non-significant negative effect on return on equity; Thus, it was concluded that sustainability disclosures could improve financial practices. It was therefore recommended amongst others that the management of listed oil and gas firms should expand their efforts in social sustainability practices by engaging in community development projects, employee welfare programs, and other socially impactful activities.