International Journal of Academic Research in Business and Social Sciences

2017, Vol. 7, No. 9

ISSN: 2222-6990

Environmental Accounting Disclosures and Financial

Performance: A Study of selected Food and
Beverage Companies in Nigeria (2006-2015)
Charles Emenike Ezeagba
Department of Accountancy, Nnamdi Azikiwe University, Awka,
Anambra State, Nigeria.
E-mail: [email protected]

John-Akamelu Chitom Rachael

Department of Entrepreneurial Studies Unit, Faculty of Management Sciences,
Nnamdi Azikiwe University, Awka, Anambra State, Nigeria.

Umeoduagu Chiamaka
Department of Accountancy, Nnamdi Azikiwe University, Awka, Anambra State, Nigeria.

DOI: 10.6007/IJARBSS/v7-i9/3315 URL: http://dx.doi.org/10.6007/IJARBSS/v7-i9/3315

Abstract
The response of firms to environmental liabilities has brought about the reconfiguration of
corporate performance indices in a larger context under the subtle influence of environmental
and social factors, in order to develop a holistic view of an entity’s performance. This study
investigated the relationship of environmental accounting disclosures and financial
performance of food and beverage companies in Nigeria. Specifically, the study examined the
relationship between environmental accounting disclosures and return on equity of food and
beverage companies in Nigeria. It also examined the relationship between environmental
accounting disclosures and return on capital employed of food and beverage companies in
Nigeria, among others. Four hypotheses were formulated and tested in line with the objectives
of the study. Data for the study were collected through secondary sources and analyzed using
Pearson’s correlation statistical technique and multiple regression, with the aid of SPSS version
20.00. The study revealed that there is a significant relationship between environmental
accounting disclosures and return on equity of selected companies. It also revealed a negative
relationship between environmental accounting disclosures and return on capital employed
and net profit margin of selected companies. Based on these findings, the researcher
recommends among others, that firms should adopt uniform reporting and disclosure
standards of environmental practices. This will enhance control and measurement of
performance. The study also advocates that firms (especially smaller ones), should be
encouraged to disclose their environmental practices in their annual reports in order to

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enhance their competitiveness which would subsequently, lead to higher corporate

performance.
Keywords: Environmental accounting, Disclosures, Financial performance, Food and Beverage.

Introduction
The increase in global environmental awareness and the campaign for sustainable economic
development is redirecting the attention of firms towards environmental sensitivity (Ngwakwe,
2008). The quest for sustainability has caused an emergence of many global institutions
enunciating varying norms that guide human interaction with the environment. These
standards are influencing business corporations to understand that their strategic position in
society has the power to influence behaviour and alter the state of physical, social and
economic environment. Environmental accounting describes the effort of accounting standard
setters, professional organizations and governmental agencies to get corporations to
participate proactively in cleaning and sustaining the environment and to describe fully, their
environmental activities in either their annual reports or stand-alone environmental disclosure.
Environmental accounting is seen by corporate managers and environmental advocates alike as
a necessary complement to improved environmental decision-making in organizations.
Whether the goal is pollution prevention, or some broader notion of “corporate sustainability”,
there is a widespread belief that sound environmental accounting will help firms identify and
implement financially desirable environmental innovations (Boyd, 1998).
Although environmental regulation, pressure group activity, and consumer awareness is weak
in developing countries, some corporations in these countries are becoming conscious of their
international market and are making appreciable effort as regards environmental practices. The
result of sampled industries in Nigeria shows that few companies are becoming environmental
friendly. However a large number of firms are still apathetic about their environmental and
social responsibility. Based on this divide, this study examines the relationship between
environmental accounting disclosures and firm financial performance. This study contributes to
existing literature by examining this issue within the context of food and beverage companies in
Nigeria, to ascertain the level of environmental accounting disclosures and how it relates to
firm financial performance.

Statement of the Problem

The response of firms to environmental liabilities has brought about the reconfiguration of
corporate performance indices in a larger context under the subtle influence of environmental
and social factors, in order to develop a holistic panorama of an entity’s performance. This has
led to a growing demand from various stakeholders for measurement of a company’s
environmental practices and subsequent public disclosure of this information. As a result, a
new area of accounting has emerged regarding environmental accounting. The interest of
accounting in the environment emerged from the reality that management needed financial
data on environmental expenditures as a result of the increasing needs of different
stakeholders such as; government, investors, lenders, general public, customers, etc to have
financial data on environmental performances of different organizations reported in financial

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statements (Ali, 2002). Consequently, the absence of comprehensive and verifiable information
on environmental practices of companies may signal a practice where companies can pollute
the environment and yet appear more economic efficient than others which incur costs to
protect the environment.
The researcher’s interest is therefore to investigate if food and beverage companies in Nigeria
disclose their environmental activities and if so, the relationship with their financial
performance.
This study aims at analyzing the relationship between environmental accounting disclosures
and firm financial performance. Furthermore, it analyzed the effect of environmental
accounting disclosures on firm financial performance.

Objectives of the Study

The main objective of this study is to investigate whether the environmental practices of
selected food and beverage companies in Nigeria are related to its financial performance. Other
objectives are to examine the relationship that exists between environmental accounting
disclosures and return on equity (ROE), return on capital employed (ROCE), net profit margin
(NPM) of selected food and beverage companies in Nigeria and to investigate the effect of
environmental accounting disclosures on earnings per share (EPS) of selected food and
beverage companies in Nigeria .
Drawing from the above objectives, this study will attempt to answer the following questions:
1. What relationship exists between environmental accounting disclosures and return on equity
(ROE) of selected companies?
2. What relationship exists between environmental accounting disclosures and the return on
capital employed (ROCE) of selected companies?
3. What relationship exists between environmental accounting disclosures and net profit
margin (NPM) of selected companies?
4. What is the effect of environmental accounting disclosures on earnings per share (EPS) of
selected companies?
In the course of this study, the following hypotheses were formulated:
Ho1: There is no significant relationship between environmental accounting disclosures and
return on equity of selected food and beverage companies in Nigeria.
Ho2: There is no significant relationship between environmental accounting disclosures and
return on capital employed of selected food and beverage companies in Nigeria.
Ho3: There is no significant relationship between environmental accounting disclosures and net
profit margin of selected food and beverage companies in Nigeria.
Ho4: There is no significant effect of environmental accounting disclosures on earnings per
share (EPS) of selected food and beverage companies in Nigeria.
The study focused exclusively on selected food and beverage firms. These companies must
have filed their annual report within the last ten years (2006-2015) for them to be selected. This
criterion places a limit on the number of firms qualifying for the study. The study is therefore
based on 10 selected food and beverage companies in Nigeria. Food and beverage companies

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were chosen for this study because of the environmental and social effects which some of their
operations have on the environment.

Conceptual Review
Definition of Environmental Costs
Environmental costs are costs incurred by companies in order to protect the environment,
prevent environmental problems and minimize damages to the environment. They are those
costs incurred in compliance with, or prevention of breach of environmental laws, regulations
and company policies. However, the true environmental costs to a firm can be far broader,
including costs of resources both those directly related to production and those involved in
general business operations, waste treatment and disposal costs, the costs of poor
environmental reputation and the cost of paying an environmental risk premium.
The U.S. Environmental Protection Agency (1996) defines environmental costs as those costs
that have a direct financial impact on a company (internal costs), and costs to individuals,
society and the environment (external costs). Any activity conducted by enterprises in their
environments leads to the emergence of environmental costs. Some of the environmental costs
arise as a result of actions taken to protect the environment and occur as a result of the use of
environmental resources. Another part of these costs arises due to environmental pollution
caused by these companies. Environmental costs can be divided into three different groups:
reduction costs, operating costs and damage costs (Otlu and Kaya, 2010).

Categories of Environmental Costs

Environmental costs can be categorized into costs that directly impact on a company's bottom-
line, which are referred to as private costs and costs to individuals, society, and the
environment for which a company is not accountable, which are called societal cost. Private
costs can further be classified into; conventional costs, potentially hidden costs, contingent
costs and image and relationship costs. This classification creates both a decision-oriented
information base for the environmental management system and for the planning, control and
supervision of material and energy flows (Lethmate and Doost, 2000).

i. Conventional Costs: The costs of using raw materials, utilities, capital goods, and supplies are
usually addressed in cost accounting and capital budgeting. However, the environmental
portion of these costs are not usually considered as environmental costs. It is important to
factor these costs into business decisions, whether are not they are seen as environmental
costs.
ii. Potentially Hidden Costs: These are environmental costs that may be potentially hidden
from managers because of their infrequent nature and/or because of their collection in
company overhead accounts (EPA 742-R-95-003, 1995). Different types of environmental costs
that may be potentially hidden from managers are; upfront environmental costs, regulatory
and voluntary environmental costs and back-end environmental costs.
iii. Contingent Costs: These are costs that may or may not be incurred at some point in the
future. Examples include the costs of remedying and compensating for future accidental

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releases of contaminant into the environment (example, oil spills), fines and penalties for future
regulatory infractions. Because these costs may not currently need to be recognized for other
purposes, they may not receive adequate attention in internal management accounting
systems and forward-looking decisions.
iv. Image and Relationship Costs: These costs are incurred to affect subjective (though
measurable) perceptions of management, customers, employees, communities and regulators.
These costs have also been termed “corporate image” and “relationship” costs. This category
can include the costs of annual environmental reports and community relations activities, costs
incurred voluntarily for environmental activities (example, tree planting), and costs incurred for
recognition programs. These costs themselves are not intangible, but the direct benefits that
result from relationship or corporate image expenses often are.
v. Societal Costs or External Costs: These are the costs a business impacts on the environment
and society for which business is not legally accountable. They include environmental
degradation and adverse impacts on human beings, their property and their welfare which
cannot be compensated through the legal system.
At present, valuing societal costs is both difficult and controversial; nevertheless, it is essential
for any environmentally friendly organization to determine external impacts and to the extent
possible, value societal costs in order to integrate them into its planning and decision-making.

Theoretical Framework
Stakeholders Theory
The basic proposition of the stakeholders theory is that the firm’s success is dependent upon
the successful management of all the relationships that a firm has with its stakeholders- a term
originally introduced by Stanford research institute (SRI) to refer to those groups without
whose support the organization would cease to exist (Freeman 1983). Freeman’s stakeholders’
theory asserts that, managers must satisfy a variety of constituents (example, employees,
customers, suppliers, local community and so on) who can influence the firm’s outcomes.
According to this view, it is not sufficient for managers to focus exclusively on the needs of
stockholders, or the owners of the business. This implies that it can be beneficial for the firm to
engage in certain environmental activities that non-financial stakeholders perceive important,
because without this, these groups might withdraw their support from the business.
In developing the stakeholder theory, Freeman, (1983) incorporates the stakeholders’ concept
into categories:
(i) A business planning and policy model, and
(ii) A corporate social responsibility model of stakeholder management.
In the first model, the stakeholder analysis focuses on developing and evaluating the approval
of corporate strategy decisions by groups whose support is required for the firm’s continued
existence. The stakeholders identified in this model include the owners, customers, public
groups and suppliers. Although these groups are not adversarial in nature, their possibly
conflicting behavior is considered a constant on the strategy developed by management to best
match their firm’s resources with the environment (Deegan and Gordon, 1966). In the second
model, the corporate planning and analysis extends to include external influences which may

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be adversarial to the firm. These adversarial groups may include the regulatory
environmentalist and/or special interest groups concerned with social issues (Guthrie and
parker, 1990). The second, model enables managers and accountants to consider a strategic
plan that is adaptable to change in the social demands of non -traditional stakeholders groups.
The stakeholders’ theory proposed an increased level of environmental awareness which
creates the need for companies to extend their corporate planning to include the non-
traditional stakeholders like the regulatory adversarial groups in order to adapt to changing
social demands (Trotman, 1999). The main concern of the stakeholders’ theory in
environmental accounting is to address the environmental cost elements and valuation and its
inclusion in the financial statements.
This study is anchored on stakeholders’ theory, as its concern is to encourage business
managers to carry out environmental practices which the non- financial stakeholders consider
very important so as to maximize stakeholders’ value as well as minimize environmental costs.

Empirical Review
Topics of environmental accounting and reporting have received substantial interest from
academic researchers for the past three decades (Rajapakse, 2003; Surman & Kaya, 2003;
Thompson & Zakarai, 2004; O’Donovan & Gibson 2000). The results of different studies
measuring the relationship between corporate financial performance and corporate social and
environmental disclosure show mixed results.
Klassen and McLaughlin (1996) proposed a theoretical model aimed at establishing a linkage
between strong environmental management and improved future financial performance. Using
empirical methods, Klassen and McLaughlin (1996) discovered that significant positive financial
returns were measured for strong environmental management while significant negative
financial returns were measured for weak environmental management.
Bewley and Li (2000) appealed to voluntary disclosure theory to examine the environmental
disclosures of Canadian manufacturing firms. They used the Wiseman index to measure the
1993 annual report disclosures of 188 firms and industry membership to proxy for pollution
propensity. They found that firms with a higher pollution propensity and greater media
coverage of their environmental performance are more likely to disclose general environmental
information, a result also consistent with the socio political theories. Similarly, Hughes et al.
(2001) examined environmental disclosures made by U.S. manufacturing firms in 1992 and
1993 using a modified Wiseman index to measure disclosures in the president’s letter, MD&A,
and notes sections of the annual report, and the CEP rankings to proxy for environmental
performance. They found that firms rated as poor by the CEP generally make the most
disclosures.
Al-Tuwaijri et al. (2004) employed simultaneous equations approach to investigate the relations
among environmental disclosure, environmental performance and economic performance.
They used proxy for environmental performance using the percentage of total waste generated
recycled as identified using the TRI database and measure environmental disclosure using a
content analysis in four categories, potential responsible parties’ designation, toxic waste, oil
and chemical spills, and environmental fines and penalties, disclosures which are largely non-

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discretionary. Based on these proxies, Al-Tuwaijri et al. (2004) documented a positive

association between environmental performance and environmental disclosure.
Salama (2005) used regression analysis to measure the impact of environmental performance
on financial performance. The findings showed that a positive relationship existed between
environmental performance and firm financial performance.Montabon, Sroufe, and
Narasimhan, (2007) in their paper examined the relationship between environmental
management practices and firm performance. They established that a significant and positive
relationship exists between environmental management practices and measures of firm
performance. Enahoro, (2009) used T-test statistics, Pearson product moment correlation and
regression analysis and observed that environmental accounting disclosure does not take the
same pattern among quoted firms in Nigeria.
Bassey, Sunday & Okon (2013) on the other hand used Pearson’s product moment correlation
analysis of oil and gas companies in the Niger Delta region of Nigeria. They observed that
environmental cost has satisfied relationship with firm’s profitability. Adediran and Alade
(2013) used multiple regression analysis of 14 randomly selected companies quoted on the
Nigerian Stock Exchange 2010. Their findings show that environmental accounting has a
positive relationship with net profit margin, dividend per share and a negative relationship with
return on capital employed and earnings per share.
It has been observed that most of these researchers adopted content analysis. Content analysis
is presently the most widely used technique for analysis of narratives in annual financial reports
(Shil & Iqbal, 2005). Since this method is mostly used by researchers, this study adopted
content analysis in examining the level of environmental accounting disclosure of selected food
and beverage firms in Nigeria and how this relates to their financial performance using multiple
regression models and Pearson’s Correlation statistical technique.

Research Methodology
The research design used in this study is ex-post facto research design as it analyzed already
existing information over a number of years. Ex-post facto research deals with the
determination, evaluation and explanation of past events essentially for the purpose of gaining
a better and more reliable prediction of the future (Amahalu et al, 2015). The research methods
involved an initial scrutiny of the companies’ annual reports to observe the incidence of
environmental practices. The companies making environmental disclosures were rigorously
examined and analyzed. For this purpose, all sections of the annual report were carefully
examined to note the presence of any environmental disclosure. Given the time and resource
constraints, the nature of the study tends to be mainly exploratory and descriptive. Although
there are a number of ways in which environmental accounting reports may be made, like
many other studies (for example, Gray et al., 1995; Guthire and Parker, 1990; Roberts, 1990
and Adams, 2004), this study will only take account of the disclosures made in the annual
reports because this is the most authentic and reliable document produced by the companies
annually.
The environmental practices information were obtained from the annual reports using content
analysis. Content analysis was adopted because it is one of the most suitable, systematic,

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objective and quantitative method of data analysis technique employed in prior research
studies in measuring a company’s social environmental disclosure in annual audited reports
(Wiseman, 1982; Deegan & Gordon, 1996; Hackston and Milne, 1996; Krippendorff, 2004;
Onyali, Okafor and Egolum, 2014).This study is to examine how environmental accounting
disclosures (measured by the environmental disclosure index) is related to financial
performance (measured by ROCE, ROE, NPM and EPS) of selected food and beverages firms in
Nigeria.

Data Presentation and Analyses

Table 1 Descriptive Statistics of Environmental Accounting Disclosures
N Minimum Maximum Mean Std.
Deviation
Environmental
100 .00 15.00 4.4900 3.42744
Accounting Disclosures
Valid N (listwise) 100
Source: SPSS Version 20; 2016
The table above shows the descriptive statistics of the practice of environmental accounting
disclosures as measured by the environmental disclosure checklist in the studied food and
beverage companies for ten years from 2006 to 2015. The minimum value, 0 indicates that
some of these companies did not practice environmental accounting disclosure at all. Some
were found to score as high as 15 (the maximum value) out of the 20 items contained in the
disclosure list. From this, it can be stated that companies that practice most practice at 75%
level (15 divided by 20). The mean value stood at 4.49 depicting that in the food and beverage
sector generally, companies have a score of only 4.49 of 20 showing 22.45% adoption.
Ho: There is no significant relationship between environmental accounting disclosures (EAD)
and return on equity (ROE) of selected food and beverage companies in Nigeria.

Table 2 Correlations for Hypothesis I

Environmental Return on Equity
Accounting
Disclosures
Pearson
1 .239*
Environmental Correlation
Accounting Disclosures Sig. (2-tailed) .016
N 100 100
Pearson
.239* 1
Correlation
Return on Equity
Sig. (2-tailed) .016
N 100 100
*. Correlation is significant at the 0.05 level (2-tailed).
Source: SPSS Version 20; 2016
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R(0.05,98) = 0.164; rcal= 0.239

Decision Rule: Accept null hypothesis if rcal is less than r(0.05, 98), if not reject null and accept
alternate hypothesis.
Since Rcal (> Rtab, we reject the null hypothesis and accept alternate that, there is a significant
relationship between environmental accounting disclosure (EAD) and return on equity (ROE) of
food and beverage companies in Nigeria.
Ho2: There is no significant relationship between environmental accounting disclosures (EAD)
and return on capital employed (ROCE) of selected food and beverage companies in Nigeria.
Table 3 Correlations for Hypothesis II
Environmental Return on Capital
Accounting employed
Disclosures
Pearson
1 .115
Environmental Correlation
Accounting Disclosures Sig. (2-tailed) .253
N 100 100
Pearson
.115 1
Return on Capital Correlation
employed Sig. (2-tailed) .253
N 100 100
Source: SPSS Version 20; 2016
R(0.05,98) = 0.164; rcal= 0.115; rcal < rtab

Decision Rule: Accept null hypothesis if rcal is less than r(0.05, 98), if not reject null and accept
alternate hypothesis.
The null hypothesis is accepted since the critical correlation value is higher than the calculated.
It is therefore concluded that there is no significant relationship between environmental
accounting disclosures (EAD) and return on capital employed (ROCE) of selected food and
beverage companies in Nigeria.
Ho3: There is no significant relationship between environmental accounting disclosures (EAD)
and net profit margin (NPM) of selected food and beverage companies in Nigeria.

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Table 4 Correlations for Hypothesis 3

Environmental Net Profit Margin
Accounting
Disclosures
Pearson
1 .139
Environmental Correlation
Accounting Disclosures Sig. (2-tailed) .169
N 100 100
Pearson
.139 1
Correlation
Net Profit Margin
Sig. (2-tailed) .169
N 100 100
Source: SPSS Version 20; 2016
R(0.05,98) = 0.164; rcal= 0.169; rcal < rtab

Decision Rule: Accept null hypothesis if rcal is less than r(0.05, 98), if not reject null and accept
alternate hypothesis.
The null hypothesis is accepted since the critical correlation value is greater than the calculated.
It is therefore concluded that there is no significant relationship between environmental
accounting disclosure (EAD) and net profit margin (NPM) of food and beverage companies in
Nigeria.
Ho4: There is no significant effect of environmental accounting disclosures (EAD) on earnings
per share (EPS) of selected food and beverage companies in Nigeria.

Table 5 Model Summary

Model R R Square Adjusted R Std. Error of
Square the Estimate
1 .405a .164 .156 5.85840
Source: SPSS Version 20; 2016
a. Predictors: (Constant), Environmental Accounting
Disclosures
Table 6 ANOVA
Model Sum of Df Mean Square F Sig.
Squares
Regression 660.393 1 660.393 19.242 .000b
1 Residual 3363.441 98 34.321
Total 4023.834 99
Source: SPSS Version 20; 2016
a. Dependent Variable: Earnings Per Share
b. Predictors: (Constant), Environmental Accounting Disclosures
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Table 7 Regression Coefficients

Model Unstandardized Coefficients Standardized T Sig.
Coefficients
B Std. Error Beta
(Constant) .752 .969 .776 .439
1 Environmental
.754 .172 .405 4.387 .000
Accounting Disclosures
Source: SPSS Version 20; 2016
a. Dependent Variable: Earnings Per Share
The Model summary as shown in Table 4.5 indicates a positive relationship between
environmental accounting disclosures and earnings per Share of 0.405 as indicated by the R,
which is the correlation coefficient of the two variables. The R Square value, 0.164 further
revealed that environmental accounting disclosure (EAD) accounts for 16.4% contribution in
Earnings per Share of companies. The Adjusted R square, 0.156 depicts that the model
formulated has 15.6% predictability.
The Regression coefficient table, Table 4.7 had the value of the constant in the regression
equation as 0.752 and beta coefficient of 0.754 at t=4.387 and sig=p=.000. This also shows
significance as sig=p=.000<.05 which is the level of significance adopted for this study. The
regression analysis also indicates that Environmental Accounting disclosures accounted for
75.4% of every change in Earnings per Share.
The regression model restated is:
EPS= 0.752 + 0.754EAD + 5.86
In order to make a decision as to the acceptance or rejection of the null hypothesis, the F
statistic value on the ANOVA table was used.
Fcal= 19.242; Ftab= F(2,100) = 3.94
Fcal > Ftab
Following the decision rule, we reject the null hypothesis and accept the alternate hypothesis
that there is a significant effect of environmental accounting disclosures on earnings per share
of selected companies. This implies that environmental accounting disclosure (EAD) has a
significant effect on the Earnings Per Share of selected companies.

Discussion of Findings and Conclusions

The study concluded that environmental accounting disclosures have not been fully embraced
by food and beverage companies in Nigeria. This could be as a result of the lack of viable
legislations, non-existence of proper enforcement of environmental laws, cost of
implementation and lack of support from top management and directors. Oyadonghan and
Gbalam (2013) and a lot of other literature also found the complacency of Nigerian companies
in various sectors to adopt environmental accounting practices Beredugo and Mefor (2012)
Also, the study found that environmental accounting disclosure improves certain measures of
performance of selected food and beverage companies in Nigeria. Companies with better
environmental accounting disclosures had higher Earnings per Share and Return on Equity. The
finding in this work is in agreement with the work of Klassen and Mclaughlin (1996); Wingard
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and Vorster (2001); Salama (2005); and Bassey et al (2013). The work of Clarkson et al (2011)
also supports this as they found that the adoption of environmental accounting practices lead
to increased resources and creation of new wealth. However, Adeniran and Alade (2013) found
negative relationship between environmental accounting practices and Earnings per Share.
Environmental accounting disclosures did not have any relationship with Net Profit Margin and
Return on Capital Employed. This implies that NPM and ROCE are significantly affected by other
factors external to this study. In other words, a company’s NPM and ROCE will not be affected
even if that company does not practice environmental accounting. This is consistent with the
findings of Horvathora (2010) when she analysed companies’ environmental accounting
practices and their financial performance using Pearson’s correlation. However, Adeniran and
Alade (2013) found positive relationship for Net Profit Margin and negative relationship
between environmental accounting practices and ROCE. Yang et al (2011) also found negative
relationship.
The analyses of the data obtained showed that companies with better environmental
accounting disclosures had higher Earnings per Share and Return on Equity. This shows that
there is a significant relationship between environmental accounting disclosures and earnings
per share and return on equity of selected companies. However, environmental accounting
disclosures did not have any significant relationship with Net Profit Margin and Return on
Capital Employed of selected companies. This implies that NPM and ROCE are significantly
affected by other factors external to this study.

Recommendations
Based on the findings of this study, the following recommendations were made;
1. This study revealed that selected companies have put in much effort towards
environmental protection. However, the current accounting system does not reflect
such efforts for its stakeholders. So, there should be an accounting standard for
measuring, treatment and disclosure of firms’ environmental practices. This will
enhance proper environmental reporting.
2. Firms should adopt uniform reporting and disclosure standards of environmental
practices for the purpose of control and measurement of performance.
3. Firms (especially smaller ones), should be encouraged to disclose their environmental
practices in their annual reports to enhance their competitiveness which would
subsequently lead to high corporate performance.
4. Top management should ensure that they comply with the environmental laws of the
nation as it will go a long way in enhancing sustainability.
5. Environmental disclosures should be made mandatory on firms so as to give a true and
fair view of corporate financial performance and position.

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