Social and Environmental Disclosures and Financial Performance of Environmentally Sensitive Firms in Nigeria: How Relevant is the Enlightened Self Interest Theory
Abstract
The purpose of this study is to investigate the relevance of enlightened self-interest theory on the interplay between social and environmental disclosure and financial performance of environmentally sensitive firms in Nigeria. The study was an empirical review and qualitative method was adopted to review individuals and firms perspective on the relevance of enlightened self-interest theory on the subject matter. Findings from the empirical study shows that environmental disclosure has a positive role in promoting environmental innovation; and institutional investor holdings has a positive effect on environmental disclosure and environmental innovation, and that environmental disclosure can help corporations establish a good public image. Also, social and environmental disclosures can enhance a firm’s share price because it attracts economic benefits such as efficient resource use, lower transaction costs amongst others and this may accrue competitive advantage based on higher disclosures being made which has a multiplier effect on the reputation of the firm amongst others. Based on the findings, the study recommended that Financial Reporting Council of Nigeria should make it mandatory for all companies in Nigeria including Cooperative Societies to prepare sustainability reports annually and there should be a standard to guide the preparation and presentation of sustainability reports or non-financial disclosures in Nigeria.
References
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