The Influence of Corporate Governance on Environmental Disclosure of Listed Non-Financial Firms in Nigeria

Abstract

The study investigates the influence of corporate governance on environmental disclosure of non-financial firms listed in Nigeria Stock Exchange (NSE), anchoring on “trinity theory” (agency, stakeholder and legitimacy theories). 86 firm-year observations across 86 companies listed in Nigeria Stock Exchange (NSE) using content analysis, cross-sectional data, OLS regression techniques were used to analyze the influence of board characteristics on the extent of overall environmental disclosure (OED). The results show that board independence, board meeting and the environmental committee were statistically significant while audit committee independence and board size were insignificant. Among the three company attributes used to mitigate spurious result only Firm size significantly influence the quantity of overall environmental disclosure of the sample companies. Auditor type “big 4” (Ernest Young, Deloitte, KPMG and PWC) and industry membership show insignificant relation to environmental disclosure. The findings indicate that the level of environmental disclosure of nonfinancial companies in Nigeria is quite insufficient at an average of 10.5 %. It is not surprising that environmentally sensitive industry and auditor type had no significant influence on the extent of environmental disclosure. This buttress the point that the environment the companies operate is institutionally and legally weak. Hence it calls for improvement on environmental law and implementation as well as harmonized environmental reporting infrastructure and standard to aid comparison.

Moderating Effect of Financial Strength on the Relationship Between Board Characteristics and Environmental Sustainability Disclosures

“…Past studies have indicated that big firms even though they are endowed with more resources as well as earning higher profits (Swastika, 2013), normally adopt discretionary reporting frequently as compared to the smaller firms (Barako and Brown, 2006;Khodadadi, Khazami, and Aflatooni, 2010). The firm financial strength was preferred due to its significant influence on the quantity of overall ecological disclosure of several firms (Odoemelam and Okafor, 2018). This supports the study's application of the financial strength as the moderating variable.…”

“…This implies that South African legal and regulatory framework (IR) is strong which substituted the degree of South Africa ecological reporting while the non-executive board of directors in Nigeria listed firms compensated for the poor regulatory environment (Adegbite, 2015). In the same vein, Odoemelam and Okafor (2018) justified the stakeholder theory on the basis that in an ecology coupled with weak legal and institutions, more of whole-time service directors will ensure stakeholders protection of their interest. Contrary to the findings is by Akbas (2016), whose results found no statistically significant association between the degree of ecological reporting and board independence.…”

“…The theory suggests that within the framework of CG mechanisms, the managers have a high likelihood of emphasizing on corporate social and ecological issues than stockholders since they have no salvage claim on an entity's generations. The assumptions underlying corporate governance and ecological reporting are agency theory (Jensen and Meckling, 1976) that creates the framework for the connection between the variables (Odoemelam and Okafor, 2018;Kabir and Thai, 2017;Allegrini and Greco, 2013;Ienciu, Popa and Ienciu, 2012).…”

Assessment of the Influence of Foreign Directors on Integrated Sustainability Reporting of Consumer Goods Firms Listed on Nigerian Stock Exchange

“…Increased awareness of social, environmental and governance issues has greatly transformed the way business is conducted (Seuring & Müller, 2008;Kolk & van Tulder, 2010;Odoemelam & Okafor, 2018) as corporations are increasingly pressured to report on additional issues such as governance, social responsibility and intellectual capital (Rodríguez-Ariza et al, 2012). Corporate boards are the ultimate decision making unit in a firm, with power and responsibility for overseeing affairs and have a significant influence on corporate strategy (Lynall et al, 2003).…”

Implementation of Social Culture in Corporate Governance: A Literature Study

“…In addition, many are not having the neccassary business background yet aged 50 years and above. This thus makes their role in the supervision of and performance for the company, both financial and non-financial performance, limited (Maryati, 2018;Dewi, 2014, Debby, et al, 2014Siahaan, 2013;Agustina, 2017;Adeniyi & Fadipe, 2018;Odoemelam & Okafor, 2018).…”