International Journal of Social Sciences and Management Review

SUSTAINABILITY REPORTING AND FINANCIAL PERFORMANCE OF LISTED AGRICULTURE AND NATURAL RESOURCES FIRMS IN NIGERIA

Authors: Adejola, Paul Adebayo, PhD, Joseph B. Omonuk, PhD & Ojuola, Olabode Kingsley

ABSTRACT

This study examines how sustainability reporting affects the financial performance of Nigerian-listed agriculture and natural resource companies. Using return on assets (ROA) as a proxy for corporate financial performance, the study’s particular goals were to ascertain if reporting on economic and social sustainability had an effect on the financial performance of the sampled industries. The annual reports of nine (9) chosen firms were the source of the data from 2014 to 2023. Using the E-Views statistical program, the panel least squares regression approach was used to assess the data. The study found that the financial performance of the examined firms is negatively and insignificantly impacted by reporting on economic and social sustainability. The study concluded that sustainability reporting had no significant effect on the performance of Nigerian listed agriculture and natural resources firms. The research recommends that managers focus on measures that foster a rise in the attributes of economic and social sustainability.

Keywords: Social Reporting, Economic Reporting, Sustainability, Return on Assets, Financial Performance

REFERENCES

• Akinadewo, I. S., Adebayo, O. B., Oluwagbade, O. I., Ogundele, O. S. and Jabar, A. A. (2023). Sustainability Reporting Practice and Financial Performance of Listed Industrial Goods Firms in Nigeria. European Journal of Science, Innovation and Technology. 3(40)
• Andreas, S. (2010). Determinants of profitability: An analysis of large Australian firms. Intellectual Property Research Institute of Australian working paper.no.3.
• Aruwa, S. A. (2006). The business entrepreneur- entrepreneurial development, small and medium enterprises. Second Edition, Entrepreneurship Academy Publications, Kaduna.
• Asuquo, A. I., Dada, E. T. & Onyeogaziri, U. R.  (2018). The effect of sustainability reporting on financial performance of selected quoted brewery firms in Nigeria. International Journal of Business & Law Research 6(3), 1-10.
• Buys, P.W., Oberholzer, M. & Andrikopoulos, P. (2011). An investigation of the economic performance of sustainability reporting companies versus non-reporting companies: A South African perspective. Journal of Social Sciences, 29(2), 151-158.
• Chandler, D. & Werther, W. B. (2014). Strategic Corporate social responsibility: stakeholders’ globalization and sustainable value        creation. Third edition. Thousand Oaks, CA: Sage Publications.
• Chiamogu, A. & Okoye, J. N. (2020). Environmental Cost and Financial Performance of Oil and Gas Companies in Nigeria. International Journal of Advanced Academic Research (Social and Management Sciences), 6(10), 1-24.
• Deegan, C. & Jeffry, U. (2006). Financial accounting theory. Berkshire SL6 2QL, McGraw-Hill Education.
• Deegan, C. (2006). Motivations for an organization within a developing country to report social responsibility information. Accounting, Auditing and Accountability Journal, 21(6), 850-874.
• Dogan, M. (2013) Comparison of Financial Performances of Domestic and Foreign Banks: The Case of Turkey. International Journal of Business and Social Science, 4, 233-240.
• Dowling, J. & Pfeffer, J. (1975). Organizational legitimacy social values and organizational behavior. Pacific Sociological Review, 18(1), 122-136.
• Etale, L. M. & Otuya, S. (2020). Environmental responsibility reporting and financial performance of quoted Oil and Gas Companies in Nigeria. European Journal of Business and Innovation Research, 6(6), 23-34.
• Freeman, R. E. (1984). Strategic Management: A stakeholder Approach, Pitman Publishing
• Gray, R., Owen, D. & Adams, C. (1996). Accounting & Accountability: Changes and Challenges in Corporate Social Environmental Reporting, Prentice Hall, Hemel Hempstead, ISBN 9780131758605
• GRI (2011). Retrieved on March 1, 2022, from https://www.globalreporting.org/media/nmmnwfsm/gri-policymakers-guide.pdf
• Guthrie, J. & Parker, L. D. (1989). Corporate Social Reporting: A Rebuttal of Legitimacy Theory. Accounting and Business Research, 9, 343-352.
• Hahn, R. & Kühnen, M. (2013). Determinants of Sustainability Reporting: A Review of Results, Trends, Theory, and Opportunities in an Expanding Field of Research (2013). Journal of Cleaner Production, 59, 5-21
• Hooghiemstra, R. (2000). Corporate communication and impression management–new perspectives why companies engage in corporate social reporting. Journal of Business ethics, 27, 55-68
• Islam, M. A, & Deegan, C. (2008). Motivations for an organization within a developing country to report social responsibility information: evidence from Bangladesh. Accounting, Auditing & Accountability Journal, 21(6), 850-874
• Ismail, W. A. W., Saad, S. M., Lode, N. A., & Kustiningsih, N. (2022). Corporate Sustainability Reporting and Firm’s Financial Performance in Emerging Markets. International Journal of Academic Research in Business and Social Sciences, 12(1), 396–407.
• Iyoha, F. O. (2012). Company attributes and the timeliness of financial reporting in Nigeria. Business intelligence journal, 5 (1), 23-32
• Jones, A. & Jonas, G. A. (2011). Corporate social responsibility reporting: The growing need for input from the accounting profession. CPA Journal, 81(2), 65-71.
• Kenton, W. (2019). What is financial performance? Available at https://www.investopedia.com/terms/f/financialperformance.asp, retrieved on September 10, 2021.
• Makori, D. M & Jagongo, A. (2013). Environmental accounting and firm profitability: An empirical analysis of selected firms listed in Bombay stock exchange, India. International Journal of Humanities and Social Science, 3(18), 248-256.
• Nasiru, A. K., Abdulrahman, B. S., Babangida, M. A. & Abubakar, S. Y. (2020). Assessment of the Relationship between Sustainability Activities and Financial Performance of Oil and Gas Companies in Nigeria. IOSR Journal of Business and Management, 22(1), 01-08
• Okafor, A., Adeusi, M. & Adeleye, B.N. (2021). Corporate social responsibility and financial performance: Evidence from US tech firms. J. Clean. Prod., 292, 126078.
• Okon, L. J., Philip, I. B. and Okpokpo, A. S. (2023). Sustainability Reporting and Financial Performance Sustainability Reporting and Financial Performance. AKSU Journal of Administration and Corporate Governance (AKSUJACOG), 3(1)
• Okutu, N. & Adegbie, F.F. (2024). Sustainability Reporting and Financial Performance of Oil and Gas Companies Listed in Nigeria. https://dx.doi.org/10.47772/IJRISS.2023.7012078, accessed on January 26, 2024.
• Omesi, I. & Berembo, A. P. (2020). Social accounting and financial performance of oil and gas companies in Nigeria (2012-2017). European Journal of Business, Economics and Accountancy, 8(1), 29-41.
• Oncioiu, I., Petrescu, A. G., Bîlcan, F. R., Petrescu, M., Popescu, D. M. & Anghel, E. (2020). Corporate sustainability reporting and financial performance. Sustainability, 12(4297), 1-13.
• Onoh, U. A., Kayadi, B. and Ndubuisi, O. C. (2023). Sustainability Reporting and Firm Value of Listed Oil and Gas Companies in Nigeria. Journal of Development Economics and Finance, 4(1), 177-223
• Owolabi, S. A. & Okulenu, S. A. (2020). Sustainability Reporting: A Catalyst to Performance of Insurance Company in Nigeria. International Journal of Research Publication, 56(1), 1-16.
• Robert, G. E., Ioannas, I. & George, S. (2015). The impact of corporate sustainability on organizational processes and performance. Journal of Social Technologies. 12(2), 12-24
• Shocker, A. D., & Sethi, S. P. (1974. An Approach to incorporating social preferences in Developing corporate action strategies”, in Sethi, S. P. (Ed), The Unstable ground: Corporate social policy in a dynamic society, Melville, publishing company, Los Angeles, CA, 67-80.
• Tulsian , M. (2014). Profitability analysis (A comparative study of SAIL & TATA steel), IOSR journal of economics and finance, 3(2), 19 – 22.
• Turel, A., Turel. A. & Needles, B. E.  (2012). Financial characteristics of high performance companies in Turkey: A comparative analysis of stable economy in the financial crisis era. Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, 11(1), 4-26.
• Uwalomwa, U., Obarakpo, T., Olubukola, R. U., Ozordi, E., Osariemen, A., Gbenedio, A. E & Oluwagbemi, S. T (2018). Sustainability reporting and firm performance: a bi-directional approach. Academy of Strategy Management Journal, 17(3), 1-16.
• Wahyuningtyas, E. T., Susesti, D. A. & Murtadho, M. (2022). Does sustainability reporting improve financial and non-financial performance in Indonesia Companies?, Advances in Economics, Business and Management Research, 201, 242-246
• Yazdanfar, D. (2013). Profitability Determinants among Micro firms: Evidence from Swedish Data. The International Journal of Managerial Finance, 9 (2), 150-160.
• Yousaf, M. & Dey, S.K. (2022). Best proxy to determine firm performance using financial ratios: A CHAID approach. Review of Economic Perspectives – Národohospodářský obzor, 22(3), 219–239.