ENVIRONMENTAL SUSTAINABILITY DISCLOSURE AND MARKET VALUE OF LISTED OIL AND GAS FIRMS IN NIGERIA

Abstract

The disclosure of sustainability activities has been a factor in improving firm performance, market value and share price of firm. This study was conducted to investigate the effect of sustainability disclosure on the market value of Oil and Gas firms listed in Nigeria. The study population covers all the ten (10) Oil and Gas firms in Nigeria listed as at 31st December, 2020 and census sampling approach was adopted. Secondary source of data was used to extract the data from the annual reports and accounts of the 10 listed Oil and Gas firms in Nigeria for period of five years (2016-2020). Robust Ordinary Least Square Regression was used as a technique of data analysis. The study used the combination of GRI and Carroll’s index and stratified the disclosure items into Philanthropic activities, Legal/ethical activities and Economic activities to proxy sustainability disclosure while Tobin’s Q was used to proxy firm market value. The study revealed that, legal/ethical activities and economic activities positively and significantly affecting the market value of Oil and Gas firms listed on the Nigerian Stock Exchange. It is recommended that government through the NNPC and other accounting standard setters develop standards, means or methods by which sustainability reporting can be measured and reported. Furthermore, the government through the NNPC should enforce and ensure compliance to the disclosure of ethical and economic activities of listed oil and gas firm as it was discovered to have a significant effect on market value. Lastly, the disclosure of ethical and economic activities of these firms should be incentivize ensuring that firms that make adequate disclosure of these activities are been rewarded with tax wavers, tax holiday and the likes.