




































Copyright © CC-BY-NC 2019, CRIBFB | AFBR 

                       Australian Finance & Banking Review; Vol. 3, No. 1; 2019 

                                       ISSN 2576-1196 E-ISSN 2576-120X 

Research Article               Published by Centre for Research on Islamic Banking & Finance and Business, USA 

 

     1 
 

Sustainable Reporting and Profitability of Quoted Firms in Nigeria: 

A Multi-Dimensional Panel Data Study 
 

 

Ngozi G. Iheduru 

Associate Professor  

Department of Accountancy 

Faculty of Business Administration  

Imo State University 

Owerri, Nigeria 

 

Charles U. Okoro 

M. Sc Student 

Department of Accountancy 

School of Management Sciences  

Ken Saro Wiwa Polytechnic  

Bori, Rivers State, Nigeria 

 

Abstract  

This paper used cross sectional data to examine the effect of sustainable reporting on the profitability indicators of 
Nigeria quoted firms between 2008-2017. Data was sourced from financial statement of the firms. Twenty firms 

were selected from the population of quoted firms in Nigeria. Return on equity, earnings per share and return on 

investment were  proxy for profitability while sustainable reporting was proxied  by economic, social, environmental 

and corporate governance disclosure. The panel data model was tested using the Hausman test. Model one and two 

validated the fixed effect while model three validated the random effect. The results found that economic disclosure 

and social disclosure have positive but insignificant effect on return on equity of the selected firms while 

environmental and corporate governance disclosure have negative and insignificant effect on return on equity, all the 

predictor variables have positive and insignificant effect on earnings per share of the firms and that economic, social 

and environmental disclosure have positive effect on return on investment while  corporate governance disclosure 

have negative effect on return on investment of the selected firms in Nigeria. We recommend that operating 

environment of the firms should be well examined and policies should be advanced to manage factors such as 
economic, social, environmental and corporate governance disclosures  to leverage the environmental challenges 

and enhance profitability, companies should ensure strict compliance to all forms  

of sustainability reporting. 

 

Keywords: Sustainable Reporting, Profitability, Quoted Firms, Panel Data Study 

 

1. Introduction 

The objective of shareholders wealth maximization is an appropriate and operationally feasible criterion to choose 

among the alternative financial actions. Organizations are generally established with an objective to maximize 

shareholders welfare while remaining profitable (Aggarwal, 2013). More often than not, activities carried on by 

these organizations tell on their immediate environment as well as the environment at large.  It provides an 

unambiguous measure of what financial management should seek to maximize in making decisions such as 
investment, dividend policy and financing decisions on behalf of shareholders (Burhan and Rahmanti, 2012). 

Financial goals are quantitative expression of corporate missions and strategies and are set by its long-term planning 

system as a tradeoff among conflicting and competing interest (Duke II, & Kankpang, 2013). These financial goals 

guides the maximization of book value of net worth, market value per share, cash flow, operating profit before 

interest and tax, maximizing the ratio of price earning, market rate of return, return on investment, net profit to net 

worth, net profit margin, market share and maximization of the growth in earnings per share, total assets, sales and 

ensuring availability of funds(Pandey, 2015). 

Every corporate organization operate  in an environment where it takes input from processed to  finished or semi- 

finish product to the environment (Akani and Briggs, 2018). This process results in externalities which is the cost 

and benefit of the corporate organization to the environment. Environmental accounting involves the identification, 

measurement and allocation of environmental costs and the integration of these costs into the business and 



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encompasses the way of communicating such information to the stakeholders (Horvathora, 2010). The concept of 

sustainability reporting maintains that while a firm strives to achieve its traditional objectives of profit 

maximization, it is important that this profit is maximized through activities that seek to integrate social and 

environmental considerations into the decision-making process. Historically advocacy for corporate sustainability 

reporting by leading governments has been on the increase with the coming together of Brazil, Denmark, France and 

South Africa, in support of the United Nations Conference on Sustainable Development (Rio+20). The 
aforementioned countries attracted the support of the Global Reporting Initiative and United Nations Environment 

Programme (UNEP).  

Organizations engage in sustainability reporting to enhance their competitiveness, in comparison with other 

companies producing similar product (Jones, 2010). Competitiveness or standing out among other organizations can 

be traced to the goodwill or intangible asset value of the firm because it cannot be physically measured in monetary 

terms. A company’s social and environmental issues can materially affect its overall performance in terms of 

corporate image and reputation (Makori and Jagongo, 2013: Aondoakaa, 2015; Babalola and Abiodun, 2012; 

Munasinghe and Kumara, 2013; Khaveh, Nikhashemi, Yousefi and Haque, 2012). The reporting of these issues 

among other corporate sustainability indicators can be traced to demands from various stakeholder groups such as 

investors, customers, employees, Non-Governmental Organizations, media and community, for increased levels of 

transparency and disclosure, ethical reasons and community concerns. While there are many studies on financial 

disclosure and corporate profitability, there is limited study citabledealing with the problem of sustainable reporting 
and profitability of quoted firms in Nigeria, therefore this study examined the effect of sustainable reporting on 

profitability indicators of Nigeria quoted firms.  

2. Literature Review 

Concept of Sustainable Reporting  

Sustainability Reporting is a  subset of accounting and reporting that deals with activities, methods and systems to 

record, analyze and report, firstly, environmentally and socially induced financial impacts and secondly, ecological 

and social impacts of a defined economic system (Jasch and Stasiskiene, 2005). Sustainability Reporting deals with 

the measurement, analysis and communication of interactions and links between social, environmental and 

economic issues constituting the three dimensions of sustainability. Sustainability Reporting is becoming more 

prevalent, driven by a growing recognition that sustainability related issues can materially affect a company’s 

performance, demands from various stakeholder groups for increased levels of transparency and disclosure and the 
need for companies (and the business community more generally) to appropriately respond to issues of sustainable 

development (Ivan, 2009). It is the practice of measuring, disclosing and being accountable to internal and external 

stakeholders for organizational performance towards the goals of sustainable development.  

Theoretical Framework  

Stakeholder theory 

The traditional definition of a stakeholder is any group or individual who can affect or is affected by the 

achievement of the organization’s objectives (Fontaine, Harman and Schmid, 2006). The general idea of the 

stakeholder concept is a redefinition of the organization. In general, the concept is about what the organization 

should be and how it should be conceptualized. Popa, Blidisel and Bogdan (2009) maintains that stakeholder theory 

is based on the premise that the stronger the companies relationships are with other interest parties, the easier it will 

be to meet its business objectives. Stakeholder theory contributes to the corporate sustainability concept by bringing 

supplementary business arguments as to why companies should work toward sustainable development. Perrini and 
Tencati (2006) stated that the sustainability of a firm depends on the sustainability of its stakeholder relationships; a 

company must consider and engage not only shareholders, employees and clients, but also suppliers, public 

authorities, local community and civil society in general, financial partners. 

Legitimacy Theory 

Legitimacy theory is derived from political economy theory and relies on the idea that the legitimacy of a company 

to operate in society depends on an implicit social contract between the company and society. As described by 

Deegan (2000) legitimacy theory asserts that organizations continually seek to ensure that they operate within the 

bounds and norms of their respective societies, that is, they attempt to ensure that their activities are perceived by 

outside parties as being legitimate. Managers continually attempt to ensure that their company complies with its 

social contract by operating within society’s expectations. This suggests that managers have incentives to disclose 

information that indicates that the company is not in breach of the norms and expectations of society, therefore, the 
company attempts to maintain its survival and continuity by voluntarily disclosing detailed information to society to 

prove it is a good citizen.  

 

Political Economy Theory 



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The political economy has been defined by Gray et al. (1996) in Deegan (2007)as the social, political and economic 

framework within which human life takes place. Political economy theory explicitly recognizes the power conflict 

that exist within society and the various struggles that occur between various groups within the society. 

The perspective embraced in political economy theory is that society, politics and economics are inseparable and 

economic issues cannot meaningfully be investigated in the absence of considerations about the political, social and 

institutional framework in which the economic activity takes place. It is argued that by considering the political 
economy a researcher is better able to consider broader (society) issues which impact on how an organization 

operates, and what information it elects to disclose. 

Following from the above point, Guthrie and Parker (1990) in Deegan (2007:130) explain the relevance of 

accounting within a political economy perspective. They state that the political economy perspective perceives 

accounting report as social, political and economic documents. They serve as a tool for constructing, sustaining, and 

legitimizing economic and political arrangements, institutions and ideological themes which contribute to the 

corporation’s private interests. Political economy theory relies on the concept that society, politics and economics 

are indivisible and economic events cannot be studied in comprehensive manner without reference to political, 

social and institutional framework in which the event occurs. A study of political economy allows researchers to 

contemplate broader issues about the information companies elect to disclose in their annual reports (Guthrie and 

Parker, 1990 in Kenth and Stewart, 2008). 

Accountability Theory  
Accountability theory is concerned with the relationship between groups, individuals, organizations and the rights to 

information that such relationships bring about. Accountability is an act of being responsible or answerable for one’s 

own decisions or actions with the expectation of explaining and justifying them when asked to do so. Simply stated, 

accountability is the duty to provide an account of the actions for which one is held responsible (Gray et al., 1991). 

The natures of the relationships and the attendant rights to information are contextually determined by the society in 

which the relationship occurs. It is absolutely true that some sort of relationship will exist between an organization 

and each of its stakeholders. Part of this relationship may be economic in nature and the terms determined by the 

parties as reflecting their relative powers in the relationship. The information flowing through the relationship will 

be determined by the power of the parties to demand it and the willingness of the organization to provide it (Gray et 

al., 1997). 

Empirical Review  
Asuquo, Dada and Onyeogaziri (2018)examined the effect of sustainability reporting on corporate performance of 

selected quoted brewery firms in Nigeria. To determine the association between sustainability reporting and 

corporate performance, data was obtained from the audited financial statements of the three brewery firms under 

study for a period of five years (2012-2016). The result of the study shows that Economic Performance disclosure 

(ECN), Environmental Performance disclosure (ENV) and Social Performance disclosure (SOC) have no significant 

effect on return on asset (ROA) of selected quoted firms in Nigeria. 

Olayinka and Temitope (2011) empirically examined the relationship between corporate social responsibility and 

financial performance in Nigeria and found out that corporate social responsibility has a positive and significant 

relationship with the financial performance measures, Yahya and Ghodratollah (2014) employed multiple-linear 

regression analysis to   investigate the impact of corporate social responsibility disclosure (CSRD) on the financial 

performance of companies listed on the Tehran stock exchange. The independent variable (CSRD) was measured by 

economic, social and environmental indices while Return on Assets, Return on Equity and Price Earnings Ratio 
were used in measuring financial performance. The analysis produced inconsistent results.  

Onyekwelu and Ekwe (2014) Used ordinary least square regression to   examine whether corporate social 

responsibility predicates good financial performance using the banking sector in Nigeria. The findings of their study 

show that the amount committed to social responsibility vary from one bank to the other. It further revealed that the 

sample banks invested less than ten percent of their annual profit to social responsibility. Onyekwelu and Ugwuanyi 

(2014) carried out a research on Corporate Social Accounting and Enhancement of Information Disclosure among 

Firms in Nigeria and found out that the inclusion and separate presentation of social costs incurred by organizations 

in the financial statements will enhance information disclosure in the statement.  

Nze, Okoh and Ojeogwu (2016) examined using the ordinary regression analysis the effect of corporate social 

responsibility on earnings of quoted firms in Nigeria in the oil and gas sector over a ten-year period and found out 

that corporate social responsibility has a positive and significant effect on earnings of firms studied.  
Babalola and Abiodun (2012) concluded that variations in selected firms performance were caused by changes in 

CSR reporting after analyzing ten firms in Nigeria for over 1999-2008. Aupperle, Carroll and Hatfield (1985) 

analyzed the relationship between corporate social responsibility and profitability of the companies listed in Forbes 

1981 Annual Directory and concluded that there was no relationship between social responsibility and profitability. 



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Murray, Sinclair, Power and Gray (2006) studied the relationship between social and environmental performance 

disclosure and financial market performance of companies in UK and found no significant relationship between 

environmental reporting and market performance.  

Aggarwal (2013) ascertained whether sustainable companies are more profitable. Using regression analysis, he 

established that sustainability has significant but varying impact on financial performance. Munasinghe and Kumara 

(2013) ascertained the relationship between Corporate Social Responsibility (CSR) and financial performance to see 
what motivates firms to voluntary initiate CSR activities. Using Spearman’s rank-order correlation they found out 

that Return on Equity and Return on Assets were positively correlated and significant. 

Makori and Jagongo (2013) investigated into whether there is any significant relationship between environmental 

accounting and profitability of selected firms listed in India. Using multiple regression analysis, they found that 

there is significant negative relationship between Environmental Accounting and Return on Capital Employed 

(ROCE) and Earnings per Share (EPS) and a significant positive relationship between Environmental Accounting 

and Net Profit Margin and Dividend per Share. 

Robbins (2011) found that most executives believe that corporate social responsibility reporting can improve profits. 

They understand that corporate social responsibility can promote respect for their company in the market place 

which can result in higher sales, enhance employee loyalty and attract better personnel to the firm. Also, corporate 

social responsibility reporting activities focusing on sustainability issues may lower costs and improve efficiencies 

as well. Robbins (2011) observed that reviewing individual empirical studies can be confusing. But by using the 
technique of Meta-analysis many studies can be statistically analyzed to determine collective results. Duke and 

Kankpang (2013) ascertained the effect of corporate social responsibility activities on the financial performance of 

firms operating in some of the industries that have the greatest impact on the environment in Nigeria. Using multiple 

regression analysis they revealed that waste management, pollution abatement are both significantly and positively 

associated with firm performance. Makori and Jagongo (2013) investigated into whether there is any significant 

relationship between environmental accounting and profitability of selected firms listed in India. Using multiple 

regression analysis they found that there is significant negative relationship between Environmental Accounting and 

Return on Capital Employed (ROCE) and Earnings per Share (EPS) and a significant positive relationship between 

Environmental Accounting and Net Profit Margin and Dividend per Share. Researching on the impact of 

sustainability performance of company on it financial performance, a study of Indian companies Aggarwal (2013) 

ascertained whether sustainable companies are more profitable. Using regression analysis he established that 
sustainability have significant but varying impact on financial performance. Munasinghe and Kumara (2013) 

ascertained the relationship between Corporate Social Responsibility (CSR) and financial performance to see what 

motivates firms to voluntary initiate CSR activities. Using Spearman’s rank-order correlation they found out that 

Return on Equity and Return on Assets were positively correlated and significant. The empirical studies examined 

above are mainly foreign studies with few studies of citable significant on the Nigeria business environment. 

3. Methodology 

This study used quasi experimental research design.. This approach combines theoretical consideration (a prior 

criterion) with the empirical observation and extract maximum information from the available data. It enables us 

therefore to observe the effects of explanatory variables on the dependent variables.  

Firms that were studied are those that are quoted on the floor of Nigerian Stock Exchange (NSE). The target size of 

20 quoted firms was drawn from various sub-sections/industries, based on the NSE classification. The Annual 

Financial Statements of the respective firms for ten years running were our major focus. The necessary data for our 
analysis were obtained from various years of NSE Fact-book. The study adopted the longitudinal time dimension, 

specifically the panel study type. The panel regression equation is different from a regular time-series or cross 

section regression by the double subscript attached to each variable. The general form of the panel data model is 

specified as: 

titii Xy ,,,  
1
 

The subscript i denotes the cross-sectional dimension and t represents the time-series dimension. The left-hand 

variable y represents the dependent variable in the model which represents the value relevance of firms listed on the 

Nigeria Stock Exchange, x contains the set of explanatory variables in the estimation model,  and is taken to be 

constant overtime t and specific to the individual cross-sectional unit  

 

 

Model Specification 



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The objective of this section is to develop models to employ to find the validity of the hypothesis: that sustainability 

reporting enhances profitability of quoted firms..  Multiple Linear Regression Technique (applying time series), and 

Analysis of Variance Technique was used to generate the models in this study. The study used positive quantitative 

research paradigm which is appropriate because it enables the capturing of knowledge through measurements of 

phenomena in which mathematical and statistical procedures are used to describe, predict and explain behavioral 

phenomena (Krasuses, 2005). The study is basically a quantitative research that aimed at examining the effect of 
sustainable reporting on profitability indicators of Nigeria quoted firms. 

 CGDENVDSODECDfROE ,,,
                             2

 

 CGDENVDSODECDfEPS ,,,
3
 

 CGDENVDSODECDfRO ,,,1
                             4

 

The regression models are thus formulated as 

   iiii CGDENVDSODECDROE 43210                   5
 

 

   iiii CGDENVDSODECDEPS 43210 6
 

   iiii CGDENVDSODECDROI 43210 7
 

 

Where 
ROE = return on equity 

EPS = Earnings per share  

ROI = Return on investment 

ECD = Economic disclosure  

SON   = Social Disclosure 

ENVD = Environmental disclosure 

CGD = Corporate governance disclosure   

1  =  Stochastic or disturbance/error term.  

t  =  Time dimension of the variables  

α 0  =  Constant or intercept.  

 

Method of Estimation and Testing 

i. Panel data regression model specifications  

Panel data can be estimated and analyzed in three   different   specification   models. These are the correlation 

matrices the Fixed Effect Model (FEM) and the Random Effect Model (REM).  In this study the fixed effect model 

is chosen over pooled OLS regression because   of the   advantages   the former has over the latter. 

ii.   Pooled Regression Model  

To obtain a reliable and unbiased estimated the analysis, this estimation method uses the classical linear regression 

assumptions which according to Albrigim Zappe and Winston, (2011) stipulate that the error term should be 

independently and normally distributed with zero mean and constant variance and more importantly must not 

correlated with the independent variables pooled OLS linear regression is given as follows: 

itititititit UXXXXY  544322110       8 

 where Yitis the dependent variable; 0 is a constant term: X1, to X5, are the independent variables; 41  to are 

slope parameters: i...n refers to the cross-sectional units and t is the time period. Using this regression specification, 

the model or this study is thus written as Gujarat; (2009) opined that pooled OLS regression model has the 

advantage of being the simplest, easy to understand and interpret as compared to the other models but the model is 

associated with some weaknesses.  



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Iii. The fixed effect model 

The fixed effect mode is highly comparable to the pooled OLS regression model in the sense that the slope 

coefficient is the same for all cross sectional and that the intercept remains unchanged across time. Employing the 

fixed effect least-squares dummy variable (LSDV)approach the issue of heterogeneity is taken different    intercepts    

for    every cross sectional and  (Brooks, 2008). The fixed model can be specified as 

itititititiit UXXXXY  43211       9 

Random Effects 

Random effects focus on the relationship with the study sample as a whole; thus, the samples are randomly selected, 

as opposed to using the entire population. The total sample regression (a function of the random effect) can be 

expressed as: 

itROE  


0

1

    


N

j

ECDf 1( SOD2 ..........543 UCGDENVD  
 10 

 

itEPS  


0

1

    


N

j

ECDf 1( SOD2 ..........543 UCGDENVD  
 11

 

 

itROI  


0

1

    


N

j

ECDf 1( SOD2 ..........543 UCGDENVD  
 12 

 

If this is represented with random variables, then ,0 joj    which indicates that the difference occurs 

randomly, and the expectation value of .
5

0 isoi 13 

4. Results and Discussion 
This section presents analysis and findings of the study as set out in the research objective and research 

methodology. The study sought to establish the effect of sustainable reporting on the profitability indicators of 

quoted firms in Nigeria. Results in the tables below contain details on the effect of sustainable reporting on the 

profitability indicators of the 20 selected quoted firms in Nigeria. 

Table i: the effect of sustainable reporting on the return on equity of quoted firms in Nigeria. 

Panel A:  Correlated Random Effects - Hausman Test  

Test Summary Chi-Sq. 

Statistic 

Chi-Sq. d.f. Prob.  

Cross-section random 11.112130 5 0.0000 

Cross-section random effects test comparisons: 

Variable Fixed   Random  Var(Diff.)  Prob.  

ECD 0.476024 0.453448 0.090455 0.9402 

SOD 0.183524 0.192809 0.002145 0.8411 

ENVD -0.147233 -0.143443 0.007228 0.9644 

CGD -0.667807 -0.663585 0.000262 0.7943 

PANEL B: Regression results 

Variable Coefficient Std. Error t-Statistic Prob.   

ECD 0.476024 1.380493 0.344822 0.7313 

SOD 0.183524 0.145949 1.257456 0.2128 

ENVD -0.147233 0.154718 -0.951618 0.3446 

CGD -0.667807 0.234754 -2.844709 0.0058 



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C 10.18255 1.378952 7.384264 0.0000 

      Effects Specification   

Cross-section fixed (dummy variables)  

R-squared 0.650012     Mean dependent var 10.19322 

Adjusted R-squared 0.480730     S.D. dependent var 1.292761 

S.E. of regression 1.081038     Akaike info criterion 3.186850 

Sum squared resid 81.80496     Schwarz criterion 3.742363 

Log likelihood -123.4082     Hannan-Quinn criter. 3.410865 

F-statistic 3.014502     Durbin-Watson stat 1.265173 

Prob(F-statistic) 0.000412    

Source: extract from E-View 9.0 
 

Panel A of the results test the validity of fixed and random effect, from the results the probability of the Hausman 

test is less than the critical value of 0.05, therefore fixed effect result is accepted.  Panel B presents the regression 

effect of sustainable accounting on the profitability indices of Nigeria quoted firms. The results proved that 65 

percent variation on the return on equity of the quoted firms can be explained by variation on the four predictor 

variables on sustainable reporting. Probability of F-statistics found that the model is statistically significant while the 

Durbin Watson Statistics proved the absence of serial autocorrelation. The probability coefficient of the variables 

found that there are no statistical differences between the fixed and the random effect. Regression coefficient of the 

variables justifies that economic disclosure and social disclosure have positive but insignificant effect on return on 

equity of the selected firms while environmental and corporate governance disclosure have negative and 

insignificant effect on return on equity. 
Table ii: the effect of sustainable reporting on earnings per share of quoted firms in Nigeria. 

PANEL C: Correlated Random Effects - Hausman Test  

Test Summary Chi-Sq. 

Statistic 

Chi-Sq. d.f. Prob.  

Cross-section random 36.581216 5 0.0000 

Cross-section random effects test comparisons: 

Variable Fixed   Random  Var(Diff.)  Prob.  

ECD 0.136702 -0.144138 0.000499 0.7393 

SOD 0.117696 -0.176701 0.002281 0.2167 

ENVD 0.104710 -0.123441 0.003877 0.7636 

CGD 0.091056 0.008413 0.001509 0.0334 

Panel D: Regression Effect of Sustainable Reporting on earnings per share   

Variable Coefficien

t 

Std. Error t-Statistic Prob.   

ECD 0.136702 0.107798 1.268128 0.2131 

SOD 0.117696 0.152467 0.771945 0.4453 

ENVD 0.104710 0.177639 0.589451 0.5593 

CGD 0.091056 0.088776 1.025678 0.3121 

C 15.40232 5.477468 2.811942 0.0080 

 Effects Specification   

Cross-section fixed (dummy variables)  

R-squared 0.600437     Mean dependent var 11.45720 

Adjusted R-squared 0.440612     S.D. dependent var 7.116944 

S.E. of regression 5.322920     Akaike info criterion 6.425246 

Sum squared resid 991.6718     Schwarz criterion 6.998853 

Log likelihood -145.6312     Hannan-Quinn criter. 6.643679 

F-statistic 3.756843     Durbin-Watson stat 1.517175 

Prob(F-statistic) 0.000734    

Source: extract from E-View 9.0 



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Again Panel C of the results justifies the validity of fixed effect, from the results the probability of the Hausman test 

is less than the critical value of 0.05, therefore fixed effect result is accepted.  The differences between the fixed and 

random effect is statistically not significant. From panel D, the results found that 60 percent variation on the 

earnings per share of the firms can be predicted by variation on the four predictor measures of sustainable reporting, 

this justifies by the significant of the f-statistics and probability while Durbin Watson statistics proved the absence 

of serial autocorrelation. The beta coefficient of the variables proved that all the predictor variables have positive 
and insignificant effect on earnings per share of the firms. 

Table iii: the effect of sustainable reporting on earnings per share of quoted firms in Nigeria. 

PANEL E: Correlated Random Effects - Hausman Test  

Test Summary Chi-Sq. 

Statistic 

Chi-Sq. d.f. Prob.  

Cross-section random 6.809936 4 0.1463 

Cross-section random effects test comparisons: 

Variable Fixed   Random  Var(Diff.)  Prob.  

ECD -0.071848 0.507468 0.278045 0.2719 

SOD 0.191573 0.255089 0.001098 0.0452 

ENVD 0.204147 0.242534 0.000344 0.0385 

CGD -0.199820 -0.096867 0.009577 0.2928 

Panel F: Regression Effect of Sustainable Reporting on Return on Investment 

Variable Coefficien

t 

Std. Error t-Statistic Prob.   

ECD 0.507468 0.133505 3.801108 0.0006 

SOD 0.255089 0.082570 3.089357 0.0041 

ENVD 0.242534 0.089788 2.701187 0.0108 

CGD -0.096867 0.166405 -0.582116 0.5644 

C 0.678448 0.355450 1.908701 0.0650 

 Effects Specification   

   S.D.   Rho   

Cross-section random 0.820470 0.8612 

Idiosyncratic random 0.329343 0.1388 

 Weighted Statistics   

R-squared 0.843470     Mean dependent var 0.485215 

Adjusted R-squared 0.824497     S.D. dependent var 0.908805 

S.E. of regression 0.351364     Sum squared resid 4.074075 

F-statistic 44.45550     Durbin-Watson stat 1.274413 

Prob(F-statistic) 0.000000    

 Unweighted Statistics   

R-squared 0.825726     Mean dependent var 2.191316 

Sum squared resid 36.37256     Durbin-Watson stat 0.252859 

 

Source: extract from E-View 9.0 

Further Panel E of the results justifies the validity of random effect, from the results the probability of the Hausman 

test is less than the critical value of 0.05, therefore fixed effect result is accepted.  The differences between the fixed 
and random effect is statistically not significant. From panel F, the results found that 60 percent variation on the 

earnings per share of the firms can be predicted by variation on the four predictor measures of sustainable reporting, 

this justifies by the significant of the f-statistics and probability while Durbin Watson statistics proved the absence 

of serial autocorrelation. Beta coefficient of the variables proved that economic, social and environmental disclosure 

have positive effect on return on investment while  corporate governance disclosure have negative effect on return 

on investment of the selected firms in Nigeria. The positive  effect  of the variables confirm the findings of Asuquo, 

Dada and Onyeogaziri (2018)that Economic Performance disclosure, Environmental Performance disclosure and 

Social Performance disclosure  have no significant effect on return on asset  of selected quoted firms in Nigeria. 



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Findings of the study show that economic disclosures do not significantly affect return on equity of selected quoted 

firms in Nigeria. This result is plausible in real business situations. The performance of firms depend heavily on 

firms pricing and volume of sale rather than disclosures of figures from previous financial periods. This result 

contradicts the findings of Makori and Jagongo (2013), who posited that environmental accounting has a significant 

influence on profitability in India. The authors argued that disclosing firm’ activities carried out for the community 

it is domiciled influences the customers’ patronage of firms’ products. The findings also showed that Environment 
disclosure have effect on earnings per share. This finding contradicts the position of Murray, Sinclair, Power and 

Gray (2006), who posited social and environmental performance disclosures do not significantly affect financial 

market performance in UK companies  The result shows that Social disclosures significantly affect return on 

investment of firms. The social expenditure carried out by the company is usually a small part of the firms’ total 

expense that is used to obtain profits of the firm. This result confirms Olayinka and Temitope (2011) results that 

corporate social responsibility disclosures significantly affect financial performance of firms. The social expenditure 

carried out by the company is usually a small part of the firms’ total expense that this used to obtain profits of the 

firm.  

5. Conclusion and Recommendations 

Generally, disclosures about issues away from mandatory requirements of the regulatory standards do not 

significantly affect profits as seen by the results of this research. Stakeholders look out for information about the 

trading activities and valuation measures of items in the financial statement, though sustainability reporting 
highlights areas of new interest in financial accounting which may eventually become significant variables that 

influence performance measures of companies. Sustainability Reporting provides a framework to create value for 

stakeholders which translates to satisfying the interest of diverse group of stakeholders. This work is anchored on 

stakeholder theory since it is propagated by stakeholder theory that managers should manage a firm for the benefit 

of all stakeholders. This is in agreement with legitimacy theory which emphasize that organizations continually seek 

to ensure that they operate within the bounds, norms and expectations of their societies and therefore, a company 

should maintain its survival and continuity by voluntarily disclosing detailed information to stakeholders to prove it 

is a good citizen. From the findings, the study concludes that there is significant relationship between sustainable 

reporting and profitability of quoted firms in Nigeria. It therefore recommends that: 

 Operating environment of the firms should be well examined and policies should be advanced to manage 

factors such as economic, social, environmental and corporate governance to leverage the environmental 
challenges and enhance profitability. 

 Companies should ensure strict compliance to all form of sustainability reporting, All cost incurred  in the 

process of business transaction should be properly reported in the financial statement and accounted for to 

enhance profitability of the firm .  

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