Effect of Environmental and Social Cost on Performance of Manufacturing Companies in Nigeria

  • Ngozi. G Iheduru Faculty of Business Administration, Department Of Accountancy, Imo State University, Owerri, Nigeria
  • Ike Romanus Chukwuma School Of Postgraduate Studies, Faculty of Business Administration, Department Of Accountancy, Imo State University, Owerri, Nigeria
Keywords: Environmental Accounting, Social costs, Performance, Return on Capital Employed, Earnings per Share, Net Profit Margin and Dividend per Share.


This study examines the effect of environmental and social costs on performance of manufacturing companies in Nigeria. The objectives of this study are to examine the relationship between environmental and social costs and performance of manufacturing companies in Nigeria. The data for the study were collected from annual reports and accounts of fourteen (14) randomly selected manufacturing companies in Nigeria. The data were analyzed using multiple regression models. The key findings of the study shows that there is significant negative relationship between Environmental and social costs and Return on Capital Employed (ROCE) and Earnings per share (EPS) and a significant positive relationship between environmental and social costs and Net Profit Margin (NPM) and Dividend per Share (DPS). Based on this it was recommended that government should give tax credit to organizations that comply with its environmental laws in order to reduce their environmental costs and that environmental reporting should be made compulsory in Nigeria so as to improve the performance of organizations and the nation as a whole.


Adediran, S.A., & Alade S.O. (2013). Impact of Environmental Accounting on Corporate Performance in Nigeria. European Journal of Business & Management, 5(23). London.

Akpan, F.E. (2013). Principles of Environmental Accounting in Oil and Gas Industry. Larigraphics Ltd, Jos, Nigeria.

Daniel, L.N. (2013). The effect of environmental regulation on financial performance in Tanziania: A survey of manufacturing companies quoted on the Dar Es Salam stock exchange. International Journal of Economics and Financial Issues, 3(1), 99-112.

Deegan, C. (2002). Legitimacy effect of Social and Environmental Disclosures a Theoretical Foundation. Accounting, Auditing and Accountability.

Deegan, C & Gordon, B.(1962). A study of the Environmental Disclosure Practices of Australian Corporations. Accounting and Business Research Journal.

EPA. (1996). Valuing Potential Environmental Liabilities for Managerial Decision- Making: A Review of Available Techniques, United States Environmental Protection Agency, Office of pollution Prevention and Toxics, Washington.

Freeman, A.B. (1983). Towards an Epistemology for Radical Accounting: Beyond Objectivism and Relativism. Critical Perspective on Accounting.

Gotherstron, Y. (2012). Environmental Accounting; Theoretical Review; Masters in Accounting Thesis, University of Gotoborg’s Sweden.

Growther, D. (2000). Social and Environmental Accounting (p.20). London, Finance Times Prentice Hall.

Iheduru, N.G. (2018). Unpublished Lecture Notes on Social and Environmental Accounting, Imo State University, Owerri.

Islam, M.A and Deegan, E.C. (2008). Motivation for organizations within a Developing country & Report Social Responsibility Information: Economics and information Technology Issue.

KPMG, United Nations Environment Programme (UNEP). (2006). Carrots and sticks for Starters’ Current Trends and Approaches in voluntary and Mandatory Standards for Sustainability Reporting, Parktown: KPMG.

Labaran S.A. (2011). Petroleum Resource and Environmental Accounting Oil and Gas. Lecaps Publishers, Jos, Nigeria.

Letmathe P, Doost R K. (2000). Environmental Cost Accounting and Auditing Management and Audit Journal.

Nigerian Stock Exchange. (2014). Annual Financial Report of Quoted Manufacturing Companies. Retrieved from http://www.topforeignstock.com/stock-list-of-listed-companies-in-nigeria.html

Odetayo, T.A., Adeyemi, A.Z., & Sajuyigbe, A. S. (2014). Impact of Corporate Social responsibility on profitability of Nigeria banks. International Journal of Academic Research in Business and Social Sciences, 4(8), 252-263. http://dx.doi.org/10.600//ijarbss/v4-18/1094

Palmer, H.J. (2012). Corporate Social responsibility and financial performance: Does it pay to be good? CMC Senior Thesis, USA Claremont College.

Schaltegger, S. & Burritt, R. (2000). Contemporary Environment Accounting, Sheffiled, UK: Greenleaf Publishing.

Schman M.C. (1995). Managing Legitimacy Strategic and Institutional approaches. Academy and of Management Review.

Tillimg. (2008). Determination of Corporate Social Responsibility Disclosure; An Application of Stakeholders and Legitimacy Theory. Accounting Organizations and Society.

Uwaigbe, U.,& Jimoh, L. (2012). Corporate Environmental Disclosure in Nigerian Manufacturing Industry. Multidisciplinary Journal Ethiopia. 6(3), 73.

Wason. V. (2005). Double Entry Book keeping (financial accounting S.Chand and Company Ltd, Ram Nagar, New Delhi.

Watts, R.L., & Zimmerman, J.L. (1978). Towards a positive Theory of the determination of Accounting Standards, Accounting Review, 54(2), 112-134.

How to Cite
Iheduru, N. G., & Chukwuma, I. R. (2019). Effect of Environmental and Social Cost on Performance of Manufacturing Companies in Nigeria. International Journal of Accounting & Finance Review, 4(2), 5-12. https://doi.org/10.46281/ijafr.v4i2.378
Regular Research Article/ Short Communication Article