Sustainability Reporting And Quality Of Corporate Disclosure: Evidence From The Nigerian Banking Sector
This study was intended to examine sustainability reporting and quality of corporate disclosure: evidence from the Nigerian banking sector. This study was guided by the following objectives; examine the overall impact of sustainability reporting on the quality of corporate disclosure in the Nigerian banking sector. And the extent to which sustainability reporting has improved corporate disclosure qualities in terms of transparency, immateriality, objectivity, understand ability and comparability in the Nigerian banking sector. The study employed the descriptive and explanatory design; questionnaires in addition to library research were applied in order to collect data. Primary and secondary data sources were used and data was analyzed using the chi square statistical tool at 5% level of significance which was presented in frequency tables and percentage. The study findings revealed that sustainability reporting has a significant impact on the quality of corporate disclosure in the Nigerian banking sector
Table of Content
- Title Page
- Table of Content
- List of Tables
- 1.1 Background of the Study
- 1.2 Statement of the Problem
- 1.3 Objective of the Study
- 1.4 Research Questions
- 1.5 Research Hypothesis
- 1.6 Significance of the Study
- 1.7 Scope of the Study
- 1.8 Limitation of the Study
- 1.9 Definition of Terms
- 1.10 Organisations of the Study
Review of Literature
- 2.1 Conceptual Framework
- 2.2 Theoretical Framework
- 2.3 Empirical Review
- 3.1 Research Design
- 3.2 Population of the Study
- 3.3 Sample Size Determination
- 3.4 Sample Size Selection Technique and Procedure
- 3.5 Research Instrument and Administration
- 3.6 Method of Data Collection
- 3.7 Method of Data Analysis
- 3.8 Validity of the Study
- 3.9 Reliability of the Study
- 3.10 Ethical Consideration
Data Presentation and Analysis
- 4.1 Data Presentation
- 4.2 Analysis of Data
- 4.3 Answering Research Questions
- 4.4 Test of Hypotheses
Summary, Conclusion and Recommendation
- 5.1 Summary
- 5.2 Conclusion
- 5.3 Recommendation
1.1 Background of the Study
The recent trend towards higher accountability and transparency in financial reporting and communication is reflected in an organization’s efforts towards more comprehensive disclosure of corporate performance (Oluwagbuyi & Adaramola, 2013). These corporate disclosures include the environmental, social and economic dimensions of an entity’s activities; this trend is aimed to add value to the quality of financial disclosure for different firm’s stakeholders. Sustainability reporting is aimed at providing information to holistically assess organizational performance in a multi-stakeholder environment (PWC, 2013).
Sustainability reporting emerged in the mid-90s with the first sustainability disclosures in accordance with the Global Reporting Initiative (GRI) sustainability reporting framework in 1997. The GRI sustainability reporting guidelines explains that sustainability reporting is the practice of firms being accountable to both internal and external stakeholders by measuring and disclosing firms’ performance in relation to the goal of sustainable development. Sustainability reporting is considered as a wider level of transparency and accountability to stakeholders for environmental, social and economic activities of firms. This reporting has been used to measure quality of firm’s sustainable development and strategic management towards sustaining the future (Muhammad 2014).
1.2 Statement of Problem
The statement of research problem identified in this study are, firstly, the crisis that engulfed the Nigerian banking sector in 2009 was as a result of non-compliance to corporate governance and inadequate disclosure of sustainable issues in the financial results, which later led to the collapse of some banks in Nigeria. Secondly, Nigeria has been ranked 136 out of 176 countries in terms of financial transparency and accountability of corporate disclosure and reporting by Transparency International (2015). There are few accounting literatures (Oluwagbuyi & Adaramola, 2013; Oyewo & Badejo, 2014) on sustainable banking practices or sustainability reporting in the Nigerian banking sector. None of these studies have examined the impact of sustainability reporting on corporate disclosure. Hence, this paper intends to fill the gap by examining whether sustainability reporting has any significant impact on the quality of corporate disclosure in the Nigerian banking sector.
The Central Bank of Nigeria (CBN) in July, 2012 issued a circular and guidelines on sustainable banking principle for banks and other financial institutions in Nigeria. A full sustainable banking report was required from each bank no later than 31 December 2014. This guideline is aimed at improving quality of financial reporting and corporate disclosure in the Nigerian banking sector.
1.3 Objective of the Study
The objectives of this study are stated as follows based on CBN sustainable reporting guidelines:
- To examine the overall impact of sustainability reporting on the quality of corporate disclosure in the Nigerian banking sector.
- To examine the extent to which sustainability reporting has improved corporate disclosure qualities in terms of transparency, immateriality, objectivity, understand ability and comparability in the Nigerian banking sector.
1.4 Research Question
- What is the overall impact of sustainability reporting on the quality of corporate disclosure in the Nigerian banking sector?
- What is the extent to which sustainability reporting has improved corporate disclosure qualities in terms of transparency, immateriality, objectivity, understand ability and comparability in the Nigerian banking sector?
1.5 Research Hypotheses
- Ho: Sustainability reporting has no significant impact on the quality of corporate disclosure in the Nigerian banking sector.
- Ha: Sustainability reporting has a significant impact on the quality of corporate disclosure in the Nigerian banking sector.
1.6 Significance of the Study
Sustainability reporting has become relevant because of the response of the public for greater financial accountability, transparency and integrity of financial reporting processes of organizations in recent times. The report of Global Reporting Initiative (2000) identified sustainability reporting as an important corporate disclosure requirement that is capable of improving the economic stability and financial reporting process of any country. Sustainability report improves reporting on environmental, social and economic activities of companies and this will help improve reputation, continuous improvement and create value. Therefore, different countries of the world have incorporated sustainability reporting as part of their corporate governance and financial disclosure guidelines.
1.5 Scope of the Study
This study is sustainability reporting and quality of corporate disclosure: evidence from the Nigerian banking sector.
1.8 Limitation of the Study
Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. The significant constraint was the scanty literature on the subject owing to the nature of the discourse thus the researcher incurred more financial expenses and much time was required in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size.
Additionally, the researcher will simultaneously engage in this study with other academic work. More so, the choice of the sample size was limited to answer the research instrument hence cannot be generalize to other corporate organizations. However, despite the constraint encountered during the research, all factors were downplayed in other to give the best and make the research successful.
1.9 Definition of Operational terms
Sustainability reporting is a systematic tool for putting together and presenting sustainability information needed for the process of management, and is also useful to stakeholders.
1.10 Organizations of the Study
The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, abnd selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.
Conclusion and Recommendations
This chapter summarizes the findings on sustainability reporting and quality of corporate disclosure: evidence from the Nigerian banking sector. The chapter consists of summary of the study, conclusions, and recommendations.
5.1 Summary of the Study
In this study, our focus was on sustainability reporting and quality of corporate disclosure: evidence from the Nigerian banking sector. The study is was specifically set to examine the overall impact of sustainability reporting on the quality of corporate disclosure in the Nigerian banking sector. And examine the extent to which sustainability reporting has improved corporate disclosure qualities in terms of transparency, immateriality, objectivity, understand ability and comparability in the Nigerian banking sector.
The study adopted the survey research design and randomly enrolled participants in the study. A total of 100 responses were validated from the enrolled participants where all respondent are staff of selected banks branches.
Corporations cite a litany of motivations for having catalyzed their sustainability reporting, including: public relations strategy, stakeholder demand, risk reduction, ethical considerations, and business opportunity. Nevertheless, academic research of this phenomenon has led to diffuse theories to explain the practice’s uptake. However, this gradual reporting metamorphosis towards sustainability comes with further diversity in the content and quality of corporate sustainability reports. The voluntary and unregulated nature of sustainability reporting affords corporations considerable latitude in determining if and how they prefer to account for the economic, social, and environmental costs and benefits associated with their business practices.
The following recommendations were made based on the above policy implication of findings:
- This paper recommends that regulatory authorities should put more measures in place to ensure continued compliance from the people saddled with the responsibility to prepare bank’s financial statement. Also, measures should be taken to enhance the quality disclosure of relevant financial reporting information especially materiality and uniformity of sustainability reporting in the Nigerian banking sector.
- There is need for independent body to provide assurance on sustainability reports in the Nigerian banking sector, this will ensure more compliance to the best practices for sustainability reporting.
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