IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 9 NO. 4 2024
DOI: 10.56201/ijefm.v9.no4.2024.pg1.20

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Environmental Remediation Cost and Financial Performance of Oil and Gas Companies in Nigeria

Korolo, Emmanuel Omolaye (Ph.D) and Korolo, Akuboere Salome (Ph.D)

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Abstract

This study investigates the relationship between environmental remediation costs and the financial performance of oil and gas companies in Nigeria. The specific objectives of the study were to determine whether environmental Pollution Prevention Cost and environmental Pollution Detection Cost have any effect on the financial performance of oil and gas companies in Nigeria using return on assets (ROA) as a measure of corporate financial performance. Ex-post facto research design was used and the study used secondary data from annual reports of sampled companies for the relevant years under consideration (2018-2022) The ordinary Least Squares regression technique was employed to investigate the relationship existing between the variables. The study found that environmental prevention cost has a negative and insignificant effect on the return on assets of oil and gas companies in Nigeria while environmental detection cost has a positive and significant effect on the Return on assets of oil and gas companies in Nigeria. Based on the findings of the study, the study concludes that there is a need for prudent management of environmental costs which will lead to both ecological stewardship and financial resilience. The study recommends amongst others that Management should develop a well-articulated employee health and safety cost system to guarantee a conflict-free corporate atmosphere needed by managers and workers for maximum productivity. IIARD – International Institute of Academic Research and Development Page 8 investments in the replenishment of the planet as that will promote their organizational image and business. The study also noted that there is a gap in the reporting of environmental activities of firms largely drawn from the unavailability of the global accounting standard to ensure accountability and harmonization of environmental reports; and called on the International Accounting Standards Boar

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