ENVIRONMENTAL PREVENTION COST AND MARKET VALUE OF MULTINATIONAL FIRMS IN NIGERIA

Abstract

Business entity cannot exist in isolation, but relate with its environment to enhance its productivity, hence it has a corporate social responsibility. However, organization often times prioritize and address the interest of its shareholders and neglect other stakeholder’s interest. The constant environmental issues that occur as a result of the organization operations and activities has led to constant reduction in the market value of the firm.The study is therefore conducted to examine the effect of environmental prevention cost on market value of listed multinational   firms in Nigeria. A longitudinal research design was adopted with extensive reliance on secondary data sourced from the annual reports of multinational companies listed on the floor of the Nigeria exchange group between year 2012 to 2022. The study focused on all the eighteen (18) multinational firms listed on the floor of NXG as at 31st December, 2022.The study utilized ordinary least square regression to examine the relationship between environmental prevention cost and market value. Environmental prevention cost has a positive and significant effect on market value of multinational companies in Nigeria indicating relationship. Environmental prevention cost is highly significant when evaluating environmental-related costs that have an impact on the market value of the company.Management of multinational companies should consider other means of detecting environmental problems and adequately ensure that the activities of the organization do not affect the environment negatively. Firms should adopt comprehensive reporting frameworks, such as the Global Reporting Initiative (GRI) standards, to provide clear and consistent information about their environmental efforts. Effective communication of environmental initiatives can build trust with investors and stakeholders, reinforcing the positive impact of sustainability on market valuation.