Financial Performance and Firm Attributes on Sustainability Performance in Nigeria: A Panel Data Analysis of Manufacturing Firms
Nyong, Mary Bassey, Etim, Utibe Daniel, Idio, Oliver Emmanuel
Abstract
This study was conducted to investigates the dynamic influence of financial performance and firm- specific attributes on the sustainability performance of manufacturing firms in Nigeria, using panel data from 21 listed manufacturing firms between 2015 and 2024. Specifically, it evaluates the effects of profitability (ROA and ROE) in line with IAS 1, assesses the impact of financial leverage (LEV) under IFRS 7, and examines the role of firm size and age as guided by IFRS S1. Employing the Panel Generalized Method of Moments (GMM) estimation technique, the study reveals that ROE and ROA significantly enhance sustainability performance, while leverage negatively affects it. Larger and older firms demonstrate stronger sustainability engagement. These findings confirm that both financial performance and firm attributes are crucial determinants of sustainability, with ROE being the most influential driver. The researchers concluded that profitability facilitates investment in ESG initiatives, while high leverage impedes sustainability progress. It was recommended from the findings of this study that, policy frameworks that align financial performance reporting with sustainability disclosures, including incentivizing sustainability-compliant firms and offering scaled reporting requirements for smaller entities. Strengthening regulatory enforcement of IFRS standards and fostering institutional support for sustainability adoption that would promote industrial growth in Nigeria.
Keywords
References
sustainability reporting practices in Nigerian food-processing firms. Journal of Sustainable
Development in Africa, 24(1): 45-60.
Akpan, E., and Etim, F. (2020). Financial performance metrics and sustainability reporting in
Nigeria’s beverage manufacturing sector. African Journal of Business Management, 14(4):
112-125.
Alade, S. O., Uche, A. N., and Ibe, C. C. (2021). Financial performance and firm-specific
characteristics: Impact on sustainability reporting in Nigeria’s manufacturing sector.
International Journal of Accounting and Finance, 10(2): 89-105.
Alvarez, P., and Soto, M. (2018). Determinants of sustainability reporting among industrial firms
in Brazil and Chile. Latin American Journal of Management for Sustainable Development,
4(2): 132-150.
Barney, J. (1991). Resource based theory. Latin American Journal of Management for Sustainable
Development, 2(3): 1-15.
Brookings Institution. (2025). Nigeria’s path to sustainable industrial development: Policies,
performance, and priorities. Brookings Economic Policy Reports. Pp. 1-12.
BusinessDay. (2024). Low ESG compliance persists despite FRCN’s 2024 -2027 mandate.
BusinessDay Nigeria Industry Reports, pp. 1-10.
Chukwu, N. E., and Eze, C. S. (2020). Capital structure and firm size as determinants of
environmental performance in Nigeria’s cement industry. Journal of Environmental
Management and Sustainability, 9(3): 201-218.
Clark, G. L., Feiner, A., and Viehs, M. (2015). From the stockholder to the stakeholder: How
sustainability can drive financial outperformance. University of Oxford. Pp. 1-7.
Cormier, D., and Magnan, M. (2007). The revisited contribution of environmental reporting to
investors’ valuation of a firm’s earnings: An international perspective. Ecological
Economics, 62(3-4):613-626.
Dowling, J., and Pfeffor, J. (1975). Legitimacy theory. Journal of Management Science, 3(1):1-
Eccles, R. G., Ioannou, I., and Serafeim, G. (2014). The impact of corporate sustainability on
organizational processes and performance. Management Science, 60(11):2835-2857.
Eze, V. C., and Okeke, P. U. (2022). Financial ratios and sustainability reporting in Nigerian
cement manufacturing firms. Nigerian Journal of Accounting Research, 8(1):55-72.
Fatemi, A., Glaum, M., and Kaiser, S. (2018). ESG performance and firm value: The moderating
role of disclosure. Global Finance Journal, 38, 45–64.
Financial Reporting Council of Nigeria (FRCN). (2024). Roadmap for sustainability disclosure
standards adoption in Nigeria: Guidelines for public companies and SMEs. Abuja: FRCN
Publications. Pp. 1-14.
Instagram. (2025). National manufacturing outlook: Nigeria’s 2023 sectoral GDP distribution.
Instagram Business Insights Nigeria. p1.
Jensen, M. C., and Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency
costs and ownership structure. Journal of Financial Economics, 3(4): 305-360.
Li, F., and Zhao, X. (2021). Corporate life cycle and ESG performance: Evidence from Chinese
listed firms. Sustainability, 13(17): 9931-9963.
Lopes, R. M., and da Silva, F. A. (2021). Firm attributes and sustainability engagement in Brazilian
automotive manufacturing. Journal of Environmental Economics and Management, 13(2):
77-95.
Margaritis, D., and Psillaki, M. (2010). Capital structure, equity ownership and firm performance.
Journal of Banking and Finance, 34(3): 621-632.
Marozva, G. (2020). Financial determinants of environmental sustainability performance inSouth
African manufacturing firms. South African Journal of Economic and Management
Sciences, 23(1): 99-115.
Nairametrics. (2023). Nigerian manufacturing sector contributed ?32.3 trillion between 2018 and
Nairametrics Sector Watch. Pp. 1-9.
National Bureau of Statistics. (2022). Annual macroeconomic report 2021–2022: Inflation,
lending rates, and sectoral performance. Abuja: NBS Publications. p 4.
Obiora, C. O., and Musa, B. A. (2018). Profitability and environmental performance in Nigeria’s
textile manufacturing industry. Journal of African Business Research, 12(1): 34-50.
Odia, J., and Ogbeide, S. (2017). Financial performance and CSR engagement in Nigerian oil and
gas manufacturing firms. Nigerian Journal of Corporate Governance, 5(2):70-88.
Olayinka, A. I., and Brown, K. (2019). Financial performance, firm characteristics, and ESG
engagement: Evidence from WAEMU manufacturing sector. West African Economic
Review, 6(1): 42- 60.
Ortiz-de-Mandojana, N., and Bansal, P. (2016). The long-term benefits of organizational resilience
through sustainable business practices. Strategic Management Journal, 37(8):1615-1631.
Reuters. (2024). Nigeria becomes first African nation to adopt ISSB-aligned sustainability
disclosure standards. Reuters Africa Business News, pp 1-16
Sila, I., and Cek, K. (2017). The impact of environmental, social and governance dimensions of
corporate social responsibility on economic performance: Australian evidence.
International Journal of Sustainable Development and World Ecology, 24(4): 284-295.
Singh, A., and Gupta, R. (2021). Profitability and ESG performance: Evidence from Indianheavy-
machinery manufacturers. International Review of Business and Economics, 19(3): 150-
Udayasankar, K. (2008). Corporate social responsibility and firm size. Journal of Business Ethics,
83(2):167-175.
Vanguard. (2023). Manufacturing sector drives GDP growth, creates jobs amid fiscal constraints.
Vanguard Economic Reports, pp. 1-12.
Waddock, S. A., and Graves, S. B. (1997). The corporate social performance–financial
performance link. Strategic Management Journal, 18(4):303-319.
Williams, L., and Zhang, Y. (2019). Corporate ESG performance and firm characteristics in
Chinese chemical manufacturing firms. Asia-Pacific Journal of Business and
Management, 10(2): 85-101.
World Bank. (2023). World development indicators: Manufacturing value added (% of GDP).
Washington, D.C.: World Bank Publications, pp. 1-13.
