Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD

The Effect of Pollution Management Cost on the Financial Performance of Oil And Gas Companies in Nigeria

Gabriel Ita Asuquo UKPEH, Raphael S ETIM PhD, Mary V ASUQUO PhD

Abstract

This study investigated the impact of pollution management cost (PMC) on the financial performance of oil and gas firms in Nigeria. Voluntary implementation and disclosure of PMC accounting techniques, reporting, and transparency continue in Nigeria, with numerous companies failing to integrate green accounting practices into their financial statements fully. An ex-post facto research design was utilised, and data regarding PMC and financial performance, indicated by return on assets (ROA), were gathered from the audited financial statements and sustainability reports of eight (8) oil and gas companies listed on the Nigerian Exchange (NGX) Group for a period of fifteen (15) years, from 2010 to 2024. The obtained data were examined via a robust Fixed Effect (FE) panel regression to demonstrate the lagged impacts of PMC on ROA. The results indicated that pollution management cost had a statistically insignificant positive effect on ROA. It is recommended that Oil and gas companies in Nigeria should allocate resources towards pollution prevention and management strategies to mitigate environmental degradation and address severe criticisms regarding unethical practices and negligence in pollution management, given that their expenditure is minimal compared to their profitability.

Keywords

pollution management cost; green accounting; financial performance; oil and gas

References

Achim, M. V. and Borlea, S. N. (2014). Environmental performance - way to boost the financial performance of companies. Environmental Engineering and Management Journal, 13 (4): 991-1004. Adebanjo, A. A. and Okere, W. (2024). Green accounting practices and value of listed firms in Nigeria. International Journal of Professional Business Review, 9(9): 01–18. Adebayo, A. J. (2022). Asset management and organizational financial performance among listed industrial goods firms in Nigeria. PhD thesis. Kwara State University, Nigeria. Adeleke, A. A. and Okere, W. (2024). Green accounting practices and the value of listed firms in Nigeria. International Journal of Professional Business Review, 9(9): 01–08. Agboola, O. S. and Oroge, C. A. (2019). Environmental costs and financial performance of cement companies in Nigeria. International Journal of Academic and Applied Research, 3(18): 60- Ahad, A. (2023). Green accounting: a new revolution. BULLET: Jurnal Multidisiplin Ilmu, 2(5): 1158-1167. Aiyesan, O. O. (2023). Sustainability reporting and financial performance of listed manufacturing firms in Nigeria. Gusau Journal of Accounting and Finance, 3(3): 33. Akanle, O. (2009). Nigeria's petroleum industry. International Journal of Environmental Studies, 6(2): 217–228. Akpan, D. C. and Nkanta, U. O. (2023). Green accounting practices and shareholders' value of listed consumer goods companies in Nigeria. European Journal of Accounting, Auditing and Finance Research, 11(6): 1–23. Aliyu, A. S. and Ndah, E. N. (2024). Green accounting and financial performance of quoted downstream oil and gas companies in Nigeria. Global Scientific Journals, 12(9):1383- Al-Najjar, B. and Anfimiadou, A. (2012). Environmental policies and firm value. Business Strategy and the Environment, 21(1): 49-59. Arellano, M. and Bond, S. (1991). Some tests of specification for panel data: monte carlo evidence and an application to employment equations. The Review of Economic Studies, 58(2), 277- Arumona, J. O., Oyewobi, I. A. and Adelabu, S. (2024). Effect of environmental information disclosure on financial performance of listed construction companies in Nigeria. International Journal of Accounting Business and Entrepreneurship (IJABE), 3(1): 18-35. Asubiojo, A. O., Dagunduro, M. E. and Falana, G. A. (2023). Environmental conservation cost and corporate performance of quarry companies in Nigeria: An empirical analysis. Research and Scientific Innovation Society, pp.49-63. Bali, S. R. and Dobers, P. (Eds.). (2025). Routledge Handbook of the UN Sustainable Development Goals Research and Policy (1st Ed.). Routledge, London, Baltagi, B. H. (2013). Econometric analysis of panel data (5th ed.). John Wiley and Sons. 78p. Chiamogu, A and Janefrances, O. (2015). Environmental cost and financial performance of oil and gas companies in Nigeria. International Journal of Advanced Academic Research, 24(1):234-256. Chukka, H. G., Madem, S. and Konathala, S. K. (2024). Leveraging green accounting for sustainable development: improve financial performance in the green industry in India. In P. Ordóñez de Pablos (Ed.), Building Climate Neutral Economies Through Digital Business and Green Skills: pp. 95-128. Clarkson, P. M., Li, Y., Richardson, G. D. and Vasvari, F. P. (2011). Does it pay to be green? evidence from firm environmental initiatives. Journal of Accounting and Public Policy, 30(2): 122–144. Dan Patrick, B. S., Umoren, A. O. and Ukpong, E. G. (2025). Green accounting and financial performance of listed oil and gas companies in Nigeria. Journal of Accounting and Financial Management, 11(2):187–205. Diaz, J. F. and Pandey, R. (2019). Factors affecting the return on assets of U.S. technology and financial corporations. Journal Manajemen Dan Kewirausahaan, 21(2): 134–144. Doobee, L. P., Uwaoma, I. I. and Johnson, N. N. (2024). Green accounting and financial performance of listed oil and gas companies in Nigeria. International Journal of Business Management, 7(6): 1-20. Emeakponuso, D. E. and Udih, M. (2015). Environmental accounting practices by corporate firms in Nigeria. Advances in Research, 3(2): 209–220. Ezeagbea, C. E., John-Akamelu, C. R. and Umeoduagu, C. (2017). Environmental accounting disclosures and financial performance: a study of selected food and beverage companies in Nigeria. International Journal of Academic Research in Business and Social Sciences, 7(9): 162-174. Farley, H. M. and Smith, Z. A. (2020). Sustainability: if it's everything, is it nothing? London: Routledge, 216p. Goll, I. and Rasheed, A. A. (2005). The effects of environmental munificence, industry dynamism, and firm age on environmental performance. Journal of Management Studies, 42(6): 1163–1181. Hannan, M. T. and Freeman, J. (1984). Structural inertia and organizational change. American Sociological Review, 49(2): 149–164. Jahun, F. U., Muhammad, M. L., Maigoshi, Z. S. and Olanisebe, M. (2024). Natural capital accounting and profitability of listed manufacturing firms in Nigeria. FUDMA Journal of Accounting and Finance Research [FUJAFR], 2(1): 75–91. Jonah, N. M. and Aaron, C. C. (2023). Environmental accounting disclosure and market value of listed food and beverages companies in Nigeria. development assistance in promoting agricultural development in Africa. In Natural Resources Forum. Oxford, UK: Blackwell Publishing Ltd. pp. 21-23. Osisioma, B. C. (1996). Analysis of financial statements: Studies in accounting: Text and reading, revised and enlarged. Acena Publishers, Enugu, Nigeria, 338-359. Ousama, J. M. and Fatima, C. A. (2010). Environmental costs and firm performance: Evidence from quoted oil companies in Nigeria. International Journal of Academic Research in Firm and Social Sciences, 7(4): 520–530. Pham, D., Do, T., Doan, T., Nguyen, T. and Pham, T. (2021). The impact of sustainability practices on financial performance: empirical evidence from Sweden. Cogent Business and Management, 8(1): 1912526. Pramanil, M., Shil, S. G. and Das, K. L. (2012). Scoring corporate environmental and sustainability reports using GRI 2000, ISO 14031 and other criteria. Corporate Social Responsibility Environmental Management, 9(6): 215-233. Roberts, P. W. (1992). An examination of the relationship between corporate social responsibility and financial performance. Academy of Management Journal, 35(2): 346–353. Szczanowicz, J. and Saniuk, S. (2016). Evaluation and reporting of CSR in SME sector. Management, 20(1): 96-118. https://doi.org/10.1515/manment-2015-0027. (Retrieved on 12 May 2025). Techera, E. (2012). Handbook of International Environmental Law. Routledge, London. p. 856 Trinugroho, I. and Lau, E. (2019). Business Innovation and Development in Emerging Economies: Proceedings of the 5th Sebelas Maret International Conference on Business, Economics and Social Sciences (SMICBES 2018). CRC Press, London, 712p. Trivedi, S., Balusamy, B., Gernal, L. M. and Al-Khasawneh, M. A. (Eds.). (2025). Green engineering for optimizing firm performance: AI and automation for sustainable technologies (1st Ed.). Chapman and Hall/CRC, London, 72p. UNIDO (2018). Industrial development report 2018. United Nations Industrial Development Organization. New York, 274p. Wooldridge, J. M. (2010). Econometric analysis of cross section and panel data (2nd ed.). The MIT Press, 234p. Xie, J., Noone, C. and Loughran, T. (2021). Corporate sustainability and firm performance: the role of firm size. Global Journal of Sustainability, 33(1): 75–91. Zik-Rullahi, A. A. and Jide, I. (2023). Green accounting: a fundamental pillar of corporate sustainability reporting. Application of systematic review methodology to food and feed safety assessments to support decision making. EFSA journal, 8(6), p.1637. Eisen, M., Zellman, G.L. and Murray, D.M., 2003.

More Articles from JOURNAL OF ACCOUNTING AND FINANCIAL MANAGEMENT

Cashflow Management and the Performance of Commercial Banks in Nigeria

Author: Jeffrey Ayas Iyakonbogha, Clement E. Ozele

The Nigerian Code of Corporate Governance and Financial Performance of Deposit Money Banks in Nigeria

Author: i, Eneaniofu Daniel Mmaduakonam, ii, Azolike Nkiru Nkechi, iii, Emeter Patrick Okechukwu, iv, Okwor Emmanuel Ejimnkonye