ENVIRONMENTAL COSTS, EARNINGS CAPACITY AND HEIGHTENING INSECURITY IN NIGERIA OIL AND GAS FIRMS – International Journal of Social Sciences and Management Review

ENVIRONMENTAL COSTS, EARNINGS CAPACITY AND HEIGHTENING INSECURITY IN NIGERIA OIL AND GAS FIRMS

Authors: Joseph Okechukwu Asogwa*, Prof. Oliver Ikechukwu Inyiama & Godwin Oghenekohwo Akparhuere, Ph.D.

ABSTRACT

This study examined the effect of environmental costs on the earnings capacity of quoted oil and gas companies in Nigeria. Environmental cost represents an independent variable while gross profit margin, return on investment, and earnings per share concentrate on the earnings capacity of oil and gas companies. A random sampling technique was used in selecting a sample of four (4) out of thirteen (13) oil and gas companies for the study. The study adopts the ex-post facto research design which resulted in the extraction of data from secondary sources based on the audited corporate annual reports of oil and gas industries and the Nigeria Stock Exchange fact book. Data collected were analyzed using descriptive statistics, correlation, and regression analysis. Hypothesis testing was done with linear regression analysis techniques using SPSS analytical software package. The results indicated that environmental costs have a non-significant but positive effect on the gross profit margin of sampled oil and gas firms in Nigeria; the environmental cost was positive and non-significant effects on return on investment and earnings per share of oil and gas industries in Nigeria. The study recommended that: (1) Management of the oil and gas industry should maximize revenues by creating sales outlays to enable the oil and gas firms to increase gross profit; (2) The management of oil and gas companies should utilize their investment opportunity to ensure a good return on investment; and (3) Management of petroleum companies should provide good policies and strategies that would increase earnings per share

Keywords: Earnings capacity, Earnings per share, Environmental cost, Gross profit,

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