Firms’ Financial Value And Web-Based Environmental Disclosures: An Empirical Evidence Of Nigerian Firms

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Firms’ Financial Value And Web-Based Environmental Disclosures: An Empirical Evidence Of Nigerian Firms


This research investigates whether firms’ financial value (FFV) enhances web-based environmental disclosure (WED). This study is very fundamental because it presents some of the first empirically tested evidence of the effects of FFV on WED employing all the firms on the Nigeria Stock Exchange (NSE). The findings of the study indicate an insignificant negative relationship between WED and EPS on one hand and insignificant positive relationship between WED and ROTA on the other. The content analyses performed show that listed firms do not adequately disclose their environmental incidents. It was recommended amongst others that regulatory framework be set mandating listed firms to own websites and dedicate pages on their corporate websites for solely reporting environmental events.

Chapter One


1.1 Background of the Study

Environmental sustainability is no doubt this century’s most significant issue currently facing all nations across the globe. The issue has assumed a high public profile resulting from concern regarding environmental degradation. This is evident in the Copenhagen Summit (COP15), the London and the parallel Pittsburgh Summit of the G20 Leaders, the United Nations Special Summit on the Environment (Firoz & Ansari, 2010; Jia, Liaxia & Adam, 2010) and the United Nations climate change summit in Paris (COP21) in December 2015 (Stern, 1990) where leaders of close to 200 nations converged to chart a course for a new template for environmental sustainability

Environmental issues have also been perceived by many companies as a fundamental issue. Lyon and Maxwell (2011) noted that environmental issues have been on the corporate radar for years. Bhasin (2012:177) affirms that “business organizations across the globe are facing the challenge of disseminating environmental information as the public concerns regarding these issues have increased”. As public awareness towards sustainable environmental development grows, industries and corporations have a major role in environmental degradation and protection thereof (ACCA, 2001; Malarvizhi & Yadav, 2009).

This consciousness has significantly signaled a shift from the traditional objectives of firms, which were mostly concerned with financial bottom line or profitability. Uwuigbe (2011:26) concurs that “in today’s business paradigm, shifting from a traditional profit-focused management to a progressive environmental management has become a key factor in strengthening corporate competitiveness”. Thus managers of businesses are expected not to only “maximize firm worth or value but also ensure environmental sustainability through their actions by lowering greenhouse emissions, reduce carbon trace, enhance the use of alternative renewable energy, and curtail environmental pollution” (Jia et al, 2010) and then disclose these environmental undertakings using the effective tool of environmental accounting.

Environmental accounting, which is viewed as a general umbrella of the literature of environmental disclosures (Eltaib, 2012) is considered one of the most important tools in adopting a successful environmental management (Uwuigbe, 2011). James (1998) sees environmental accounting as identifying and reporting of environment specific costs of liability and waste disposal.

Environmental disclosures have been traditionally done through the conventional print media including company’s annual reports (CARs) even for various strategic reasons (Lohdia, 2005; Malarvizhi and Yadav, 2009; Rouf and Harun, 2011). However, these media cannot be used for continuous and effective disclosures (Smith & Pierce, 2005; Dutta & Bose, 2007; Khan, 2007). Ghasempour and Yusof (2014) observe that print-based information could take from a few minutes to many days for a mailed copy of a print-based annual report to get to stakeholders. Thus companies are now exploring the use of unconventional reporting and communication media (Adams and Fros, 2004).

Web-based corporate reporting is no doubt an increasing global trend in the past two decades or thereabout. Xiao, Jones and Lymer (2005:132) concurs that “within a short period of less than 20 years, the internet has grown from an essentially academic facility to the backbone of the information superhighway”. Considering this global trend, one relevant question to ask is: “can companies within Nigeria afford to be left out of this all-encompassing wave of technological competency for environmental reporting practices?”

Firms’ financial value (FFV) and web-based environmental disclosure (WED) in Nigeria is yet to be fully researched. Therefore, the literature in this line is largely inadequate. The attempt by Uwuigbe (2012) covers only a minute section of the entire companies that own a website as listed on the Nigeria Stock Exchange (NSE). This study fills the gap by providing empirical evidence on the effect of firms’ financial value on web-based environmental disclosures of the entire companies quoted on the Nigeria Stock Exchange

1.2 Statement of the Problem

Studies on web-based environmental disclosure (WED) have been well researched in developed economies and more current literature has centred specifically on bigger firms operating in the developed world (Adams & Frost, 2004; Lodhia, 2004, 2005, 2006, 2007; Jose & Lee, 2006; Razeed, 2009; Chowdhury & Hamid, 2013). Lodhia (2006:71) further echoed this position noting that “web-based environmental communications studies are relatively new additions to the environmental communication literature and that most of these studies are based on practices in the UK, US and Australia”. The foregoing cannot be said of African countries particularly Nigeria. Moreover, previous researches on web-based environmental disclosures as performed in developed economies cannot be generalised to Nigeria due largely to systematic and cultural differences.

The main problem of this study is that there is a very limited literature on web-based environmental disclosures of quoted firms in Nigeria. Furthermore, the attempt made by Uwuigbe (2012) covers a very small section of the entire listed companies on the NSE that own a website and did not compare web-based environmental disclosure extent across entire industry groups. This study fills this gap by providing empirical evidence on the relationship between firms’ financial value and web-based environmental disclosures of the entire NSE listed firms that operate and maintain a corporate website.

1.3 Research Questions

  1. What is the extent of web-based environmental disclosures (WED) of quoted firms in Nigeria?
  2. To what extent does firms’ financial value enhance the level of web-based environmental disclosures (WED) in Nigeria?

1.4 Objectives of the Study

Specifically, this study seeks to:

  1. Assess the extent of web-based environmental disclosure of quoted firms in Nigeria;
  2. Determine whether firms’ financial value enhances the degree of web-based environmental disclosures (WED) of quoted firms in Nigeria.
  3. To examine the relationship between web-based environmental disclosure and a firm financial value
  4. To examine the role of government in ensuring full integration of a web-based environmental disclosure by quoted companies

1.5 Research Hypotheses

The following research hypotheses were formulated by the researcher to aid the successful completion of the study;

  1. H0: there is no significant relationship between web-based environmental disclosure and a firm financial value
    H1: there is a significant relationship between web-based environmental disclosure and a firm financial value
  2. H0: the government does not play any role in ensuring full integration of a web-based environmental disclosure by quoted companies
    H2: the government does play a role in ensuring full integration of a web-based environmental disclosure by quoted companies

1.6 Significance of the Study

The study basically seeks to ascertain whether there is a significant difference in the level of web-based disclosure of corporate environmental information between listed financial and non-financial firms in Nigeria. The study also looked at the relationship between the level of web-based disclosure of corporate environmental information and the financial performance of selected listed firms. In addition, the study considered a total of 30 listed firms (i.e. both financial and non-financial) in the Nigerian stock exchange market. The choice of these firms arises based on their level of market capitalization, nature of production and most importantly the nature of production and industrial operations of the selected firms

1.7 Scope and Limitation of the Study

The scope of the study covers firms financial value and web-based environmental disclosure and empirical evidence of Nigeria firm; but in the cause of the study, there were some factors that limited the scope of the study

Financial Constraint

Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time Constraint

The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study.

1.8 Operational Definition of Terms


Finance is a field that is concerned with the allocation of assets and liabilities over space and time, often under conditions of risk or uncertainty. Finance can also be defined as the science of money management

Financial Valuation

In finance, valuation is the process of determining the present value of an asset. Valuations can be done on assets or on liabilities

Environmental Disclosure

Environmental Disclosure means the text of the Environmental Reports, in each case including the attachments thereto but excluding the underlying documents referred to in the Environmental Reports


A web-based application is any program that is accessed over a network connection using HTTP, rather than existing within a device’s memory. Web-based applications often run inside a web browser

1.9 Organization of the Study

This research work is organized in five chapters for easy understanding as follows

  • Chapter one is concern with the introduction which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study it’s based thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion and recommendations made of the study.

Chapter Five

Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was to ascertain the firm’s financial value and web-based environmental disclosure and empirical evidence of Nigeria.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of web-based environmental disclosure of firms financial statement.

5.2 Summary

The current state of environmental accounting reporting and disclosures might best be described as unsettled and full of ambiguity. Statutory, quasi-regulatory and standard setters are yet to give environmental accounting reporting and disclosure issues high priority. While the accounting profession recognize the financial significance of environmental costs and benefits. The majority appears to hold that the accounting for these costs need no new theoretical issues and underpinnings but rather the guidance and requirement of IAS1 (presentation of financial statement) are satisfactory. The studies revealed that as a result of the absence of standards, different company disclose environmental accounting information either based on industry best practice, pressures from environmental activist and advocate, (companies in environmental sensitive industry) and relationship with parent company (multinational corporations). This agrees with prior studies of Uwuigbe and Jimoh (2012); Jorgensesn and Sodorstrom, (2006) Larrinaga-gonzalezetal, (2002); Holland and Foo (2003) and Solomon and Lewis (2002). Ionel-Alin (2012) said that in the absence of environmental accounting standards, the stakeholders are forced to rely on only voluntary environmental reporting as noted by Larinaga-gonzalezetal (2002). And this reporting varies across companies industries, countries and continents. The researchers therefore recommend that accounting standards setters should give priority to development and formation of a standard on environmental accounting information disclosure so as to create uniformity in the disclosure.

5.3 Conclusion

This study concludes that most companies majorly disclose information related to products and consumers, employees and community involvement. It was also observed that the Corporate Environmental Disclosure (CED) of these companies contains little quantifiable data. The results provide further evidence that CED in Nigeria is still very ad-hoc, general and self-laudatory in nature. The results, therefore, provide some preliminary evidence of the possibility that CED in Nigeria represent attempts by companies to improve their corporate image and to be seen as responsible corporate citizens. In addition, the content analysis result also suggests that CED do not vary substantially across industry. Neither was there any distinct pattern for a particular company. Finally, these findings imply that without some form of regulatory intervention, reliance on voluntary disclosure alone is unlikely to result in either a high quality of disclosure or sufficient levels of disclosure.

5.4 Recommendations

The study recommends that the government puts in place a regulatory template for internet reporting regardless of the size or industry classification of a firm with a view to reducing agency conflicts arising from information asymmetry. This is most emphasized now that the world is in an information communications technology (ICT) age. Future research in this direction is encouraged. Future studies could possibly examine the extent to which these firm determinants predict the web disclosure of voluntary and mandatory information items and if there is any significant difference in the web disclosure of these items across industries. The extent to which stakeholders access or prefer corporate information on the web as against published hard reports is also an interesting point of study and would add valuable contribution to existing literature.

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