Corporate Governance and Environmental Sustainability Reporting: The Nigerian Perspective

Abstract

Environmental Sustainability reporting enhances the quality of financial reporting by revealing the corporate investments in the care of the environment. As a result of the deficiency of traditional financial reporting in information disclosure to stakeholders on the impact of negative externality resulting from company operations, the need for environmental sustainability reporting has become a global phenomenon. This study explored the effect of corporate governance dimensions of board size, board independence, chief executive officer (CEO) duality, female directorship and board ownership on environmental sustainability reporting. The study adopted ex-post facto research design. The population of the study comprised 169 quoted companies on the Nigerian Stock Exchange (NSE) as at December 31, 2018. Samples of 42 quoted companies were selected through stratified and purposive sampling techniques for the period of 10years (2010-2019). Data were sourced from published audited annual report and accounts of the sample companies. Data were analyzed using descriptive and inferential statistics. The findings revealed that corporate governance (CG) had positive and significant effect on environmental sustainability reporting (ENSR) of selected quoted companies in Nigeria (Adj R = 0.178, Wald-Stat = 80.23, p < 0.05). Board size, board independence and female director have positive and significant effect on ENSR (BS = 0.141, t-test = 6.176, p < 0.05, BI = 0.120, t-test = 2.955, p < 0.05, FD = 0.133, t-test = 4.965, p < 0.05). However, CEO duality has positive and insignificant effect on ENSR while board ownership has negative and insignificant effect on ENSR (CD = 0.046, t-test= 1.800, p > 0.05 and BO = -0.001, t-test= -0.453, p > 0.05). The study concluded that corporate governance has a significant effect on environmental sustainability reporting in quoted companies in Nigeria. The shareholders should include more female and independent directors on board, as a greater proportion of female directors will boost environmental sustainability reporting. Also, consideration for board membership should not be based on share ownership and the role of chairman and CEO should be separated.