Ethical Behavioural Disclosure and Financial Performance of Listed Industrial Goods Firms in Nigeria

Abstract

Purpose: Interests in the nexus between ethical performance and financial performance have generated mixed results. However, despite the number and the variety of studies, the evidences available suggest not been comprehensively examined. Also, there is no sufficient effort to examine this relationship within the industrial good sector in Nigeria. This calls for further study. \nDesign/Methodology: This study uses a functional coefficient regression technique to estimate panel-varying betas and alpha in three financial performance models. The empirical data were collected from the Nigerian Stock Exchange over a period of 2010-2019. Data were analyzed using random effects models after accounting for multicollinearity, heteroskedasticity, normality. \nFindings: Results show that human resource development disclosure and community service disclosure have significant positive effects on financial performance while environmental and product safety disclosures have significant negative effects on financial performance. \nOriginality/Value: The study therefore concludes that ethical behavioural practices of listed industrial firms have significant effects on financial performance. The study recommends among others that industrial firms should redirect their ethical practices into human resource development and community services since their disclosures enhance financial performance.