International Journal for Tourism and Technology (IJTT)
This study evaluated the effect of environmental cost reporting on financial performance of listed agricultural companies in Nigeria. The study anchored on the legitimacy theory and adopted ex-post facto research design. Five (5) listed agricultural companies were employed as population of the study. This study adopted census sampling technique due to availability data and completeness of the data. The cross-sections included in the study was five (5) agricultural companies sample period includes ten (10) years with a total panel observation of fifty (50) spanning from 2014 to 2023. The data for this study were sourced from the published annual accounts of the sampled agricultural companies on the Nigeria Stock Exchange Group. The study adopted descriptive statistics, unit root test, and Panel Least Square (PLS) regression technique estimates were used for the data analyses. The study finding showed that there is a significant effect of waste management cost on return on investment, there is no significant effect of health and safety cost on return on investment, there is a significant effect of legal regulations fees on return on investment. Based on the result, the study concluded that there is a significant effect of environmental cost reporting on financial performance of listed agricultural companies in Nigeria. The study recommended amongst others that management of listed agricultural companies in Nigeria should ensure adequate compliance with the guidelines of waste management cost as this portrays a good image of their firm financial performance.
Corporate organizations in the past thought that shareholders profitability and prosperity were
not concern with any environmental impact on the people wherein they operate. The resultant effects of these are the various forms of environmental degradations such as air, water, land or soil, deforestation, noise pollution, overpopulation, natural habitat destruction, ecosystem destruction, loss of biodiversity, climate change, wildlife extinction, depletion of the ozone layer, etc (Lawrence & Bernard, 2023; Major & Nwdighoha, 2024; Nwdighoha, 2024; Chinedu et al., 2023; Abubakar & Sadiq, 2023; Akinadewo et al., 2023; Ighoroje & Ozigbo, 2023; Syarief & Julia, 2023; Murti, 2023; Clement & Oluwaseun, 2023; Ishmael et al., 2023; Kansilembo et al., 2023; Dunia, 2023; Okere et al., 2022; Naji & Hawkar, 2022). Ihenyen and Ikegima (2022) acknowledged that many companies are created with the objective of maximizing owners’ wealth without considering its economic footprints on the other
stakeholders as well as the community at large. They further stated that the activities of many companies such as oil and gas companies, manufacturing companies and agricultural companies do generate negative impacts which are called social failure and threats. These include deforestation, elimination of marine life, increased atmospheric carbon dioxide, increased climatic disruption, persistent deposit of toxic chemicals into human beings, constant melting of mountain, increased health hazard caused by the sound and smoke emission from generators and factory plants Environmental cost reporting is a mechanism for companies to voluntarily have environmental concerns carried out by stakeholders and supervised by legal organizations (Haleem et al., 2021; Derila et al., 2020). Murti (2022) stated that environmental cost reporting is a voluntary mechanism carried out by the company, focusing on environmental impacts due to business operations, interactions with stakeholders, and forms of accountability to the law. Companies have widely used the application of environmental cost accounting as a tool to help manage environmental performance (Ilelaboye & Alade, 2022; Obiora et al., 2022; Ezenwaka et al., 2022; Ogbonna et al., 2020). Ulupui et al. (2020) showed that one of the tools used by companies to manage environmental performance was MFCA (Material Flow Cost Accounting). Mazahrih (2019) argued that environmental information enables
stakeholders to evaluate a company's efficiency with the utilization of economic resources, commitment to environmental preservation, and the ability to make decisions that can improve environmental performance. The implementation of MFCA could reduce environmental costs along with increasing the effectiveness of the company's performance. Ulupui et al. (2020) also mentioned that green accounting encouraged companies to comply with government regulations and policies. Endiana et al. (2020) found that environmental cost reporting affected the company's financial position. Information on the company's environmental costs was significant and sufficient to support financial performance.
Companies with sustainable principles also tended to pay attention to environmental cost accounting in line with their attention to environmental management. Therefore, if a company implements green accounting, it will result in good environmental performance, often with an increase in its financial performance (Syarief & Julia, 2023; Murti, 2023; Clement & Oluwaseun, 2023; Endiana et al., 2020).
Waste Management Cost, Health and Safety Cost, Legal Regulations Fees