Effect Of Environmental Cost On Corporate Performance Of Manufacturing Firms In Nigeria

ABSTRACT

The study examined the effect of environmental cost on corporate performance of listed manufacturing firms in Nigeria. The specific objectives examined the effect of environmental cost on return on equity, return on asset and Tobin of listed manufacturing firms in Nigeria. The study employed the use of Ex-Post Facto research design and content analysis. A Simple linear regression was used to analyse the data collected from the listed manufacturing firms. The result revealed that; Environmental cost had a positive significant effect ( p.value of 0.0466 which is less than 0.05 ) on return on equity and ( p-value of 0.0000, which is less than 0.05) on return on asset of listed manufacturing firms in Nigeria and both indicates that the test is statistically significant at 5% level. The result also revealed that environmental cost had no significant effect (p-value of 0.6475, which is greater than 0.05) on Tobin Q of listed manufacturing firms in Nigeria and this indicates that the test is statistically insignificant at 5% level. The study therefore recommended that firms in Nigeria should invest reasonable amount on environmental issues and report same in their financial reports for the various stakeholders to see. This will create a good relationship with the host community which will enable growth in production and increase in turnover, this is as a result of the positive relationship of environmental cost disclosure on return on asset and equity. Again, the Financial Reporting Council of Nigeria (FRC) and others alike should make environmental cost reporting a mandatory report as this can help compel the firms to engage in environmental conservation activities that will mitigate the adverse effect of their business activities on the host communities. As a result, this will lead to a conducive business operating environment and increase in profitability.