Firm Specific Characteristics and Sustainability Performance in Emerging Economies: Evidence from Nigeria

Abstract

Research Purpose: In an era marked by growing global concern over the environmental impact of businesses, understanding the factors driving sustainability reporting in emerging economies like Nigeria is paramount. This study investigates the relationship between firm-specific characteristics and sustainability reporting practices, focusing on listed manufacturing firms in Nigeria, a sector known for its environmental sensitivity.

Methodology: Employing an ex-post causal research design, this study analyses secondary data from the Nigerian Stock Exchange (NSE) and MachameRatios database for 31 listed manufacturing firms from 2013 to 2022. Panel data regression is utilised to assess the impact of firm-specific characteristics on sustainability disclosure.

Findings: The study reveals a significant positive association between financial literacy and profitability, and environmental sustainability disclosure. However, no substantial relationship was found between leverage and environmental disclosure.

Conclusion: This study, one of the first to explore the influence of firm-specific characteristics on sustainability reporting in Nigerian manufacturing companies, highlights the crucial role of financial literacy and profitability in driving environmental disclosure.

Recommendations: The findings provide valuable insights for regulators, practitioners, and investors in assessing the impact of corporate governance reforms on sustainability reporting practices in Nigeria. Further research is recommended to explore the link between leverage and environmental disclosure, and to investigate the broader implications of these findings for promoting sustainable business practices in emerging economies.