Environmental Performance and Value of Listed Industrial Goods Firms in Nigeria: Mediating through Financial Performance
DOI:
https://doi.org/10.61143/umyu-jafr.7(1)2024.011Keywords:
Environmental performance, financial performance, value in Nigerian industrial goods firmsAbstract
This study examined the mediating effect of financial performance on the relationship between environmental performance and value of listed industrial goods firms in Nigeria. Data for the study was extracted from the annual reports and accounts of the sampled firms for the period of fourteen (14) years (2010-2023). The data collected was analyzed using descriptive statistics to provide summary statistics for the variables, while correlation analysis was carried out to assess the correlation between the dependent and explanatory variables. Structural Equation Modeling (SEM) was used to estimates the relationship between environmental performance and firm value, and subsequently, to test significance of indirect effects the path model (Monte Carlo simulation) approaches was employed for mediation analysis. The study found that Employee Health and Safety Cost (EHSC) one of the proxies of environmental performance influences financial performance. More so, Staff Development Cost (SDC) as proxy for environmental performance affects value of listed industrial goods firms in Nigeria. In the same vein, financial performance has insignificant impact on firm value of the sampled firms and financial performance is not proven as a variable that mediates the relationship between environmental performances on firm value. The study recommends that the management of listed industrial goods companies in Nigeria should prioritize and invest in environmental initiatives, recognizing that strong environmental performance can directly enhance firm value. Finally, management should invest in staff training and development focused on sustainability can equip employees with the skills necessary to implement and manage environmental initiatives effectively.
Metrics
References
Abdullahi, A. T., & Muhammad, L. M. (2023). Impact of environmental cost on financial performance of listed industrial goods firms in Nigeria. International Journal of Research and Scientific Innovation, 10(12), 64-82. https://doi.org/10.51244/IJRSI.2023.1012006
Aggarwal, P. (2013). The impact of sustainability performance of company on its financial performance: A study of listed Indian companies. Global Journal of Management and Business Research: Finance, 13(11), 61-70.
Aini, N., & Faisal, N. T. (2021). The effect of environmental performance on firm value using financial performance as mediator variable. International Journal of Entrepreneurship and Business Development, 4(3), 390-395. https://doi.org/10.29138/ijebd.v4i3.1391
Akinleye, M. J. (2022). Internal environmental cost and financial performance of selected listed firms in Nigeria. Fuoye Journal of Accounting and Management, 5(2), 95-116.
Akinleye, M. J., & Olaoye, C. O. (2021). Community development cost and financial performance of oil and gas firms in Nigeria. KIU Interdisciplinary Journal of Humanities and Social Sciences, 2(3), 43-56. https://doi.org/10.59568/KIJHUS-2021-2-3-04
Alkhairani, K. A., Kamaliah, K. S., & Rokhmawati, A. (2020). Analysis of the influence of good corporate governance and corporate social responsibility on company value with profitability as an intervening variable in mining companies listed on the Indonesia Stock Exchange. KIAT Economic Journal, 31(1), 10-25.
Al-Omari, R., Oroud, Y., Makhlouf, M. H., Alshehadeh, A. R., & Al-Khawaja, H. A. (2024). The impact of profitability and asset management on firm value and the moderating role of dividend policy: Evidence from Jordan. Asian Economic and Financial Review, 14(1), 1-11. https://doi.org/10.55493/5002.v14i1.4937
Apriandi, D., Mardika, I. H., & Astuti, T. B. (2022). The influence of environmental costs and good corporate governance on company value with profitability as an intervening variable. Digital Journal of Accounting, 2(2), 99-115.
Asriani, N. K. A., Werastuti, D. N. S., & Atmadja, A. T. (2024). The influence of intellectual capital and environmental performance on company value with financial performance as an intervening variable of listed manufacturing companies in Indonesia. Accounting Scientific Journal, 9(1), 159-185. https://doi.org/10.23887/jia.v9i1.69045
Azeem, A., Naseem, M. A., Ali, R., & Ali, S. (2024). How does environmental performance contribute to firm financial performance in a multi-country study? Mediating role of competitive advantage and moderating role of voluntary environmental initiatives. Journal of the Knowledge Economy, 2(1), 34-56. https://doi.org/10.1007/s13132-024-02193-4
Budiharjo, R. (2019). Effect of environmental performance and financial performance on firm value of listed firms in Indonesia. International Journal of Academic Research in Accounting, Finance and Management Sciences, 9(2), 65-73. https://doi.org/10.6007/IJARAFMS/v9-i2/6030
Chang, K. (2015). The impacts of environmental performance and propensity disclosure on financial performance: Empirical evidence from unbalanced panel data of heavy-pollution industries in China. Journal of Industrial Engineering Management, 8(1), 21-36. https://doi.org/10.3926/jiem.1240
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. https://doi.org/10.46654/ij.24889849
Dahliatul, H. A., Khasanah, I., & Sucipto, A. (2020). The influence of corporate social responsibility and good corporate governance on firm value with profitability as an intervening variable. AKUNTABEL, 17(1), 14-28.
Dai, Q., Huang, H., Zhang, X., Su, Y., Liu, C., & Li, Q. (2022). Mediation effect of corporate tax burden and the relationship between environmental regulation and firm performance. International Journal of Environmental Research and Public Health, 19(22), 14-37. https://doi.org/10.3390/ijerph192214987
Darmayoga, M., Putri, G. A., Widanaputra, G. P., Wirajaya, I. G., & Budiarta, I. P. (2020). The effect of environmental performance on company value with environmental disclosure as a mediating variable. American Journal of Humanities and Social Sciences Research, 4(1), 72-80.
Dowling, J., & Pfeffer, J. (1975). Organizational legitimacy: Social values and organizational behavior. The Pacific Sociological Review, 18(1), 122-136. https://doi.org/10.2307/1388226
Ebong, G. A., Anweting, I. B., Etuk, H. S., Ambrose, I. S., & Okon, A. O. (2023). Impacts of varied industrial activities within southern Nigeria on air environment and human health. GSC Advanced Research and Reviews, 17(3), 134-144. https://doi.org/10.30574/gscarr.2023.17.3.0469
Eke, P., Fente, F. A., & Odukwu, V. C. (2024). Effect of employee health and safety cost on profitability of listed oil and gas companies in Nigeria. Journal of Social Responsibility, Tourism and Hospitality, 4(2), 35-46. https://doi.org/10.55529/jsrth.42.35.46
Ekpoese, J. D., & Enidiok, E. O. (2021). Environmental cost and financial performance of quoted oil and gas companies in Nigeria: A critical examination. International Digital Organisation for Scientific Research Journal of Applied Sciences, 6(1), 70-78.
Enekwe, C. I., Ugwudioha, O. M., & Uyagu, B. D. (2023). Effect of environmental costs on the financial performance of listed oil and gas companies in Nigeria. International Journal of Accounting Research, 8(1), 31-36.
Fauzi, T. H. (2022). The effect of environmental performance on firm value with mediating role of financial performance in manufacturing companies in Indonesia. Academic Journal of Interdisciplinary Studies, 11(3), 256-265. https://doi.org/10.36941/ajis-2022-0081
Fauziyyah, N. (2019). The effect of environmental performance and ownership structure on firm value with financial performance as an intervening variable [Bachelor's thesis, Faculty of Economics and Business Uin Jakarta].
Frankline, A., Wanyama, M., & Fozia, N. (2022). Community development costs and financial performance of sugar manufacturing companies in Kenya. American International Journal of Business Management, 5(1), 101-107.
Handayani, S. (2019). The influence of environmental performance on firm value through financial performance. Journal of Management Analysis, 5(1), 45-51.
Hayatul, A., Shofiatul, J. B., & Ilyas, J. M. (2023). The impact of green accounting and environmental performance on firm value with profitability as an intervening variable. Journal of Accounting and Business Economics, 12(2), 21-32. https://doi.org/10.33795/jaeb.v12i2.5122
Ho, L., & Lu, Y. (2024). Does corporate sustainability performance matter for cash holdings? International evidence. International Journal of Managerial Finance. Advance online publication. https://doi.org/10.1108/IJMF-01-2024-0052
Ibeanu, I. R., Okwo, I. M., Nkwagu, L. C., & Nkwagu, C. G. (2023). Impact of environmental cost on corporate performance: focus on selected oil firms in Nigeria. IOSR Journal of Business and Management, 25(12), 01-11.
Ifurueze, A., Etale, L. M., & Frank, B. P. (2013). The impact of environmental cost on corporate performance: A study of oil companies in Niger Delta states of Nigeria. Journal of Business & Management, 2(2), 1-10. https://doi.org/10.12735/jbm.v2i2p01
Indriastuti, M., & Kartika, C. A. (2021). Integrating corporate social responsibility disclosure and environmental performance for firm value: An Indonesia study. In L. Barolli, K. Yim, & T. Enokido (Eds.), Conference on complex, intelligent, and software intensive systems (pp. 435-445). Springer. https://doi.org/10.1007/978-3-030-79725-6_43
Ismail, A. I., Islam, K. M. A., & Haque, M. S. (2021). Sustainability reporting and financial performance of listed industrial goods sector in Nigeria. International Journal of Accounting & Finance Review, 9(1), 46-56. https://doi.org/10.46281/ijafr.v9i1.1541
Kurawa, J. M., & Shuaibu, K. (2022). Environmental disclosure and financial performance of listed non-financial companies in Nigeria. European Journal of Accounting, Auditing and Finance Research, 10(2), 31-51. https://doi.org/10.37745/ejaafr.13/vol10no1pp.31-51
Lawrence, U. E., & Bernard, E. E. (2023). Environmental costs and financial performance of selected industrial goods firms in Nigeria: A moderated regression analysis approach. Fuoye Journal of Finance and Contemporary Issues, 4(1), 83-97.
Li, X., Saat, M. M., & Liu, Y. (2024). The impact of environmental performance on firm value: evidence from listed companies in China. International Journal of Academic Research in Business and Social Sciences, 2(1), 1140-1150. https://doi.org/10.6007/IJARBSS/v14-i7/21898
Liniarti, S. (2019). Factors affecting company value with institutional ownership as moderating variables in banking companies listed in Indonesia Stock Exchange. International Journal of Public Budgeting, Accounting and Finance, 2(3), 1-12.
Machali, M. M. (2020). The effect of environmental and social disclosure on firm value with financial performance as intervening variable. Journal of Accountancy and Auditing Indonesia, 24(1), 22-32. https://doi.org/10.20885/jaai.vol24.iss1.art3
MacKinnon, D. P., Coxe, S., & Baraldi, A. N. (2012). Guidelines for the investigation of mediation variables in business research. Journal of Business and Psychology, 27(1), 1-14. https://doi.org/10.1007/s10869-011-9248-z
Major, I. H., & Nwdighoha, L. E. (2024). Environmental costs and financial performance of listed food and beverage firms in Nigeria. Journal of Advancement in Management and Accounting Research, 10(1), 109-133.
Mardiana, I. A., & Wuryani, E. (2019). The effect of environmental performance on firm value with profitability as a moderating variable. Akunesa Accounting Journal, 8(1), 34-54.
Maryanti, E., & Fithri, W. N. (2017). Corporate social responsibility, good corporate governance, environmental performance on financial performance and its effect on company value. Journal of Accounting Science, 1(1), 21-35.
Memon, J. A., Anwar, S., Aziz, A., Rahman, K. U., & Bhatti, A. A. (2021). Ownership structure and company's performance of pharmaceutical companies of Pakistan. Palarch's Journal of Archaeology of Egypt/Egyptology, 18(5), 273-289.
Memon, M. A., Cheah, J. H., Ramayah, T., Ting, H., & Chuah, F. (2018). Mediation analysis: Issues and recommendations. Journal of Applied Structural Equation Modeling, 2(1), 2-10. https://doi.org/10.47263/JASEM.2(1)01
Moeljadi, A., & Supriyati, T. S. (2014). Factors affecting firm value: Theoretical study on public manufacturing firms in Indonesia. South East Asia Journal of Contemporary Business, Economics, and Law, 15(2), 32-44.
Musa, A., & Ibrahim, N. (2017). The impact of the financial performance on firm value: evidence from developing countries. International Journal of Applied Business and Economic Research, 15(16), 329-341.
Mutmainah, R. S., & Sitawati, R. (2023). The effect of environmental performance on company value with financial performance and corporate governance as intervening variables. Sammajiva: Jurnal Penelitian Bisnis Dan Manajemen, 1(4), 288-309. https://doi.org/10.47861/sammajiva.v1i4.568
Norhasimah, M. N., Norhabibi, A. S. B., Nor, A. A., Shehu, M. Q., & Inaliah, M. A. (2016). The effects of environmental disclosure on financial performance in Malaysia. Procedia Economics and Finance, 35, 117-126. https://doi.org/10.1016/S2212-5671(16)00016-2
Norhasmimah, M. N., Norhabibi, A. S. B., Nor, A. A., Shehu, M. Q., & Inaliah, M. A. (2016). The effects of environmental disclosure on financial performance in Malaysia. Procedia Economics and Finance, 35, 117-126. https://doi.org/10.1016/S2212-5671(16)00016-2
Nurul, A. N., & Faisal, N. T. (2021). The effect of environmental performance on firm value using financial performance as mediator variable of listed non-financial companies Indonesia. International Journal of Entrepreneurship and Business Development, 4(3), 390-395. https://doi.org/10.29138/ijebd.v4i3.1391
Nuwahereza, N. (2024). A review of historical development of environmental impact assessment vis a vis Nigeria environmental impact assessment act of 1992 as amended in 2004. Greener Journal of Environment Management and Public Safety, 12(1), 44-49. https://doi.org/10.15580/gjemps.2024.1.103024156
Nwaimo, S. C. (2020). Effect of environmental costs on performances of quoted firms in Sub-Saharan Africa (2007-2016). European Journal of Accounting, Auditing and Finance Research, 8(7), 97-120. https://doi.org/10.37745/ejaafr/vol8.no7.pp97-120.2020
Nwanwu, P. O. (2022). Waste management cost and financial performance of oil and gas companies in Nigeria: An empirical analysis. International Journal of Business & Law Research, 10(2), 72-84.
Obara, L. C., Ohaka, J., Nangih, E., & Odinakachukwu, I. O. (2017). Effect of accounting for waste management expenditure on the profitability of oil and gas companies in Nigeria. International Journal of Economics, Commerce and Management, 5(3), 68-81.
Okafor, E. A., Okwo, I. M., & Nwoha, C. E. (2021). Effect of environmental costs on firm performance. Contemporary Journal of Management, 3(6), 26-39.
Okafor, T. G. (2018). Environmental costs accounting and reporting on firm financial performance: A survey of quoted Nigerian oil companies. International Journal of Finance and Accounting, 7(1), 1-6.
Olanisebe, M. B., Ahmad, H. S., & Muhammad, L. M. (2023). The effect of institutional ownership on tax avoidance of listed companies in Nigeria: The mediating effect of profitability. FUOYE Journal of Accounting and Management Science, 6(1), 84-110. https://doi.org/10.33003/fujafr-2023.v1i1.2.1-26
Oraka, A. O. (2021). Environmental costs and financial performance of listed oil and gas companies in Nigeria. Research Journal of Management Practice, 1(5), 1-18. https://doi.org/10.46654/RJMP.1514
Patima, P., Helmi, S. M., & Rusmita, S. (2024). Effect of environmental accounting on firm value with profitability as an intervening variable. International Journal of Economics, Business and Management Research, 8(9), 230-244. https://doi.org/10.51505/IJEBMR.2024.8914
Putri, A. O. (2015). The influence of financial performance on company value with CSR disclosure as a moderating variable. Journal of Management Science and Research, 4(2), 56-69.
Rani, S., Rakhmawati, A., & Wulandari, W. (2023). Effect of environmental performance and capital structure on financial performance: Evidence from mining sector companies listed on IDX. New Applied Studies in Management, Economics & Accounting, 2(26), 32-43.
Ratri, R. F., & Dewi, M. (2017). The effect of financial performance and environmental performance on firm value with Islamic social reporting (ISR) disclosure as intervening variable in companies listed at Jakarta Islamic Index (JII). SHS Web of Conferences, 34, 12-33. https://doi.org/10.1051/shsconf/20173412003
Rinsman, T. C. S., & Prasetyo, A. B. (2020). The effects of environmental performances on firm value with environmental disclosure as an intervening variable. Journal of Accounting Dynamics, 12(2), 90-99. https://doi.org/10.15294/jda.v12i2.24003
Saputra, I. P. A., & Mahyuni, L. P. (2018). The influence of ownership structure and environmental performance on company value. Journal of Business Management, 15(3), 64-81.
Sarkar, S., Moolearambil, M., Nair, S., & Datta, A. (2023). Role of environmental, social, and governance in achieving the UN sustainable development goals: A special focus on India. Environmental Progress & Sustainable Energy, 2(2), 44-56. https://doi.org/10.1002/ep.14204
Septiavin, Q., Feriansyah, F., Ricardo, R., Kautsar, A., Puspitawati, E., & Salsabilaf, S. (2023). Environmental performance on corporate financial performance: Does a nonlinear relationship occur? Journal of Central Banking Law and Institutions, 2(3), 435-460. https://doi.org/10.21098/jcli.v2i3.174
Setiawanta, Y., Utomo, A. D., Pamungkas, I. D., Jumanto, J., & Ifada, L. M. (2021). The impact of profitability on firm value: Does environmental performance play a mediation role? Journal of Hunan University (Natural Sciences), 48(7), 220-228.
Seun, K. J., Igbekoyi, O. E., Ogungbade, O. I., & Dagunduro, M. E. (2023). Environmental accounting practice and financial performance of listed aviation firms in Nigeria. Asian Journal of Economics, Business and Accounting, 23(13), 70-80. https://doi.org/10.9734/ajeba/2023/v23i13996
Sisdianto, E., Razimi, M. S. A., Masykur, R., Sari, R. D. M., & Robiansyah, A. (2023). The effect of environmental performance on financial performance with Islamic Corporate Social Responsibility (ICSR) as intervening variable. JIA (Jurnal Ilmiah Akuntansi), 8(1), 191-205. https://doi.org/10.23887/jia.v8i1.52442
Soedjatmiko, S., Tjahjadi, B., & Soewarno, N. (2021). Do environmental performance and environmental management have a direct effect on firm value? Journal of Asian Finance, Economics and Business, 8(1), 687-696. https://doi.org/10.13106/jafeb.2021.vol8.no1.687
Sucuahi, W. T., & Cambarihan, J. M. (2016). Influence of profitability to the firm value of diversified companies in the Philippines. Accounting and Finance Research, 5(2), 56-70. https://doi.org/10.5430/afr.v5n2p149
Sudimas, M. R., Ramdany, R., & Ispriyahadi, H. (2023). Does financial performance mediate the impact of green accounting and environmental performance on firm value? Journal of Governance Risk Management Compliance and Sustainability, 3(1), 58-73. https://doi.org/10.31098/jgrcs.v3i1.1487
Sujata, D., & Madhusmita, D. (2023). Adoption of green HRM practices by healthcare sector for increasing organizational citizenship behavior and its impact on environmental sustainability. Asian Journal of Management, 14(3), 178-184. https://doi.org/10.52711/2321-5763.2023.00030
Suminar, N. R. (2018). The effect of environmental performance, corporate governance and profitability on firm's value [Unpublished research project]. Faculty of Economics and Business, Muhammadiyah University of Surakarta.
Tjahjono, S., & Eko, M. (2013). The influence of environmental performance on company value and financial performance of manufacturing firms in Indonesia. Esa Unggul University Economic Journal, 4(1), 45-62.
Tofighi, D., & MacKinnon, D. P. (2016). Monte Carlo confidence intervals for complex functions of indirect effects. Structural Equation Modeling: A Multidisciplinary Journal, 23(2), 194-205. https://doi.org/10.1080/10705511.2015.1057284
Triwahyuni, T., Kholis, A., Maipita, I., & Kristanto, F. (2022). Environmental performance of listed companies on the Indonesia Stock Exchange (IDX): In efforts to improve financial performance and firm value. Indonesia Journal of Management Sciences, 2(2), 56-87. https://doi.org/10.4108/eai.20-9-2022.2324707
Ubokudom, A. I., Akpan, D. C., & Akinninyi, P. E. (2024). Environmental remediation costs and financial performance of listed oil and gas companies in Nigeria. International Journal of Accounting Intelligence, 2(1), 41-56.
Wahidahwati, W., & Ardini, L. (2021). Corporate governance and environmental performance: How they affect firm value. Journal of Asian Finance, Economics and Business, 8(2), 953-962. https://doi.org/10.13106/jafeb.2021.vol8.no2.0953
Wiredu, J., Qian, Y. A., Sampene, S., & Simplice, A. A. (2023). The effect of green supply chain management practices on corporate environmental performance: Does supply chain competitive advantage matter? International Journal of Management Sciences, 3(1), 34-56. https://doi.org/10.2139/ssrn.4599705
Wu, S., Li, X., Du, X., & Li, Z. (2022). The impact of ESG performance on firm value: The moderating role of ownership structure. Sustainability, 14(21), 1-22. https://doi.org/10.3390/su142114507
Yuniarta, G. A., Purnamawati, I. G., & Jie, F. (2023). Strengthening the role of corporate social responsibility in the dimensions of sustainable village economic development. Heliyon, 9(4), 1-12. https://doi.org/10.1016/j.heliyon.2023.e15115
Zhao, X., Lynch, J., & Chen, Q. (2010). Reconsidering Baron and Kenny: Myths and truths about mediation analysis. Journal of Consumer Research, 37(2), 197-206. https://doi.org/10.1086/651257
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 UMYU Journal of Accounting and Finance Research

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.