Effect of Environmental Cost on Performance of Manufacturing Firms in Nigeria

Abstract

The study examined the effect of environmental cost on the performance of some selected manufacturing firms in Nigeria using return on asset as a proxy for performance. Environmental training cost, donations and charitable cost, waste management cost and corporate social responsibility cost were used as proxy for environmental cost. Data were collected from the annual financial statement of the selected firms and the ex-post facto research design was adopted. The dependent and independent variables were observed over the period, 2011 to 2020. Stationarity of the data were tested using the Augmented Dickey- Fuller unit root test statistic and the data were analyzed using the Panel Least Square. The signs and significance of the regression coefficients were relied upon in explaining the nature and influence of the independent variable on the dependent variable as to determine both magnitude and direction of impact. Findings from the study showed that, environmental training cost, donations and charitable cost, waste management cost and corporate social responsibility cost had positive and significant impact on return on asset of manufacturing firms in Nigeria. The study therefore, concluded that environmental cost had positive and significant effect on the performance of manufacturing firms in Nigeria. The study therefore recommended that manufacturing firms should invest in environmental training, donations and charity, waste management and remain socially responsible to the host communities to ensure smooth and uninterrupted operations.