ASSESSING THE EFFECT OF ENVIRONMENTAL REPORTING QUALITY ON THE LIQUIDITY OF LISTED MANUFACTURING FIRMS IN NIGERIA

Cornelius U. Offia; Isaac M. Ikpor; Sunday O. Eje

Authors

Cornelius U. Offia Department of Accountancy, Alex Ekwueme Federal University Ndufu-Alike, Nigeria
Isaac M. Ikpor Department of Accountancy, Alex Ekwueme Federal University Ndufu-Alike, Nigeria
Sunday O. Eje Bursary Department, Alex Ekwueme Federal University Ndufu-Alike, Nigeria

Keywords:

environmental reporting quality; sustainability disclosure; liquidity; current ratio; health and safety disclosure; environmental remediation; pollution control; Nigeria

Abstract

This study examines whether the quality of environmental reporting is associated with the liquidity of listed manufacturing firms in Nigeria. Drawing on Stakeholder Theory and Signaling Theory, the study disaggregates environmental reporting into employees’ health and safety disclosure (EHSD), environmental remediation disclosure (ERD), and pollution control disclosure (PCD), while liquidity is measured by the current ratio. An ex post facto design is employed using secondary data extracted from annual reports, sustainability reports, and corporate websites of 21 listed manufacturing firms. The final balanced panel used for the reported random-effects estimation comprises 147 firm-year observations. Pooled, fixed-effects, and random-effects models are estimated, with the Hausman test supporting the random-effects specification (p = 0.9670). The results indicate that EHSD is positively and significantly associated with liquidity (β = 0.5302, p = 0.0052), whereas ERD (β = −0.6474, p = 0.0003) and PCD (β = −0.8595, p = 0.0002) are negatively and significantly associated with liquidity. The model explains approximately 71.5% of the variation in liquidity. The findings suggest that disclosure quality does not have a uniform financial effect: human-capital and safety transparency appear to strengthen short-term financial resilience, while remediation and pollution-control disclosures may reflect the financial burden of environmental obligations. The study contributes to the sustainability-accounting literature by shifting attention from aggregate disclosure scores to disclosure dimensions and by linking environmental reporting quality directly to short-term financial resilience in an emerging-market manufacturing setting.

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ASSESSING THE EFFECT OF ENVIRONMENTAL REPORTING QUALITY ON THE LIQUIDITY OF LISTED MANUFACTURING FIRMS IN NIGERIA

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