Challenges of Reporting Environmental Assets and Liabilities in Nigeria (Evidence from Listed Manufacturing Companies)

 
Abstract 
This study investigates the challenges of 
reporting environmental assets and liabilities 
among Nigerian listed firms using data from 
the Nigerian Exchange (NGX) and the 
National Bureau of Statistics (NBS). The study 
aimed at evaluating how the level and extent 
of environmental assets and liabilities 
disclosures affect financial reporting quality, 
firm performance, cost of capital, and 
regulatory compliance. The population 
comprised 125 listed firms, out of which 10 
were purposively selected for consistently 
publishing environmental data in their annual 
or sustainability reports. The extent of 
environmental assets/liabilities disclosure 
(EADiscl) was measured through content 
analysis, assigning scores between 0 (no 
disclosure) and 1 (comprehensive quantitative 
disclosure). Financial reporting quality was 
assessed using the modified Jones model, firm 
performance was proxied by return on assets 
(ROA), and cost of capital was computed as 
the ratio of interest expense to total assets. 
Results from multiple regression analyses 
revealed that environmental disclosure 
significantly improved financial reporting 
quality (R² = 0.48, p < 0.01) and firm 
performance (R² = 0.59, p < 0.01). 
Recognition of environmental liabilities had a 
strong positive influence on earnings per share 
(R² = 0.71, p < 0.01), while disclosure reduced 
cost of capital (R² = 0.42, p < 0.01). 
Furthermore, regulatory enforcement 
significantly enhanced environmental 
disclosure practices (R² = 0.63, p < 0.01). The 
study concluded that transparent 
environmental accounting strengthens 
financial credibility and corporate 
sustainability in Nigeria, while institutional 

 
weakness critically undermined disclosure 
quality; hence stricter enforcement and 
standardised reporting frameworks is highly 
recommended.