Microsoft Word - UPLOAD TO ME HASSAN GUJAF VOL 6 ISSUE 2 APRIL MR HASSAN 2222[1] Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 166 RELATIONSHIP BETWEEN BOARD HETEROGENEITY AND ENVIRONMENTAL PERFORMANCE IN NIGERIAN MANUFACTURING FIRMS Ibrahim Lawal, PhD Department of Accounting Federal University Birnin Kebbi Kebbi State lawal6492@yahoo.com Habiba Ahmed Gwadabe Department of Business Administration Federal University Birnin Kebbi Kebbi State habeebaahmadg@gmail.com Audu Monday, PhD Department of Accounting, Babcock University, IIisha-Remo Remo Ogun State monaudu@gmail.com https://doi.org/10.57233/gujaf.v6i2.12 Abstract This study investigates the relationship between board heterogeneity and environmental performance in Nigerian manufacturing firms, focusing on four key dimensions of board composition, board independence (BIND), board gender diversity (BGEN), board professionalism (BPRO), and board nationality diversity (BNAT), with firm size (FSZ) as a moderating variable. Using a panel dataset of 68 Nigerian manufacturing firms over the period 2015 to 2024, the study employs panel corrected standard errors (PCSE) regression models to address heteroscedasticity and autocorrelation issues. The findings indicate that all four dimensions of board heterogeneity positively influence environmental performance, with firm size enhancing the effect of diversity on sustainability practices. This study contributes to corporate governance literature by demonstrating the importance of board diversity in improving environmental stewardship, particularly in large firms. Conclusively, this study emphasizes the importance of promoting diversity in board composition to improve environmental stewardship. Recommendations include that Nigerian manufacturing firms should prioritize increasing the diversity of their boards, particularly in terms of gender and nationality, to strengthen environmental governance. Additionally, policymakers should consider creating incentives for companies to enhance board diversity as a strategic tool for improving corporate sustainability. Keyword: Board Heterogeneity, Environmental Performance, Nigerian Manufacturing Firms 1.0 Introduction The harmful effects of business operations on the environment have heightened global awareness of the critical role corporate law plays in driving firms to promote social and economic progress. In Nigeria, the situation is particularly alarming: The National Oil Spill Detection and Response Agency Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 167 (NOSDRA) reported 13 oil spills with serious environmental and health concerns in March 2020 alone, adding to nearly 2,400 oil spill incidents recorded between 2006 and 2010 in the oil-producing regions. This environmental degradation has led to an upsurge in illegal activities, including pipeline vandalism and crude oil theft. According to the Nigeria Extractive Industries Transparency Initiative (NEITI), the oil and gas sector lost at least $41.9 billion between 2009 and 2019 due to theft and sabotage. These persistent losses and environmental harms underscore the urgent need for firms to adopt socially responsible strategies that address the social, economic, and environmental concerns of their host communities. If businesses were to meaningfully integrate sustainability into their operations, both community wellbeing and corporate performance would see significant improvement. However, the regulatory environment in Nigeria poses challenges: the primary corporate law, the Company and Allied Matters Act (CAMA), remains largely shareholder-centric, focusing almost exclusively on maximizing shareholder wealth while neglecting broader stakeholder interests such as the local community and suppliers (Amodu, 2017). Particularly, Sections 279(4) and 279(9) of CAMA do not impose any legal obligations on corporate directors towards non-shareholding stakeholders, reinforcing a culture where community welfare is deprioritized in corporate decision-making. Globally, businesses are increasingly concerned about their environmental stewardship due to the growing recognition of their negative environmental impacts. In contrast to this global movement, Nigeria's environmental situation remains severe, as the country is ranked the tenth- most polluted nation worldwide (Airvisual, 2018) and the seventh-largest gas-flaring country (World Bank, 2020). Many environmental challenges in Nigeria are the direct result of business activities motivated by the relentless pursuit of shareholder profits (Legit, 2017; UNEP, 2014). Companies continue to exhibit an insufficient commitment to environmental protection despite clear evidence linking corporate behavior to ecological degradation (UNEP, 2011). In instances of environmental disasters, companies with poor track records face significant reputational damage through negative media exposure, further undermining their legitimacy. Attempts by firms to conceal environmental misdeeds often provoke stronger public outrage, including widespread protests by affected communities and civil society organizations. Thus, the failure of Nigerian companies to engage meaningfully with environmental issues is not only ethically troubling but increasingly threatens their social license to operate. This situation highlights the critical need for stronger regulatory frameworks and greater corporate accountability mechanisms to align Nigerian business practices with sustainable development goals. The global business landscape has also witnessed a profound shift towards sustainability disclosure, driven by increased public scrutiny and regulatory expectations in industrialized nations (KPMG, 2020). Sustainability reporting has emerged as a key mechanism for demonstrating environmental and social accountability. Nevertheless, in developing countries like Nigeria, environmental disclosure remains sporadic and underdeveloped (Iredele & Akinlo, 2015). Studies by Okpala (2019), Nosakhare (2019), Haladu and Salim (2017), and Sanusi (2016) consistently find that corporate sustainability reporting in Nigeria is still at its infancy, with a greater emphasis placed on social investment disclosures rather than environmental accountability. Businesses prefer to highlight activities such as charitable donations and community projects rather than transparently reporting their environmental impacts. This strategic emphasis on social over environmental disclosures suggests that firms seek to enhance their public image without confronting more challenging environmental realities. Oba and Fodio (2012) further observed that the quality of environmental disclosure among Nigerian firms is poor, often lacking the detail and credibility required for meaningful Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 168 accountability. In conclusion, although Nigeria is among the world’s highest environmental polluters, corporate awareness and commitment to addressing environmental issues remain disappointingly low. Without a genuine shift towards integrating environmental stewardship into core business strategies, Nigerian corporations will continue to fall short of meeting both local expectations and global sustainability standards The relationship between board diversity and sustainability disclosure has garnered significant scholarly attention, with numerous studies suggesting that diverse boards are more likely to promote transparency and comprehensive sustainability reporting. Board diversity, including aspects such as gender, ethnicity, age, and educational background, introduces a range of perspectives and experiences that can influence strategic decision-making in favor of socially responsible practices (Post, Rahman, & Rubow, 2011). Such diversity helps firms align with stakeholder expectations and improve legitimacy, both of which are essential drivers of sustainability disclosure in manufacturing firms (Bear, Rahman, & Post, 2010). The experience and composition of board members play a critical role in effective corporate governance and sustainability disclosure. Directors with advanced degrees and professional qualifications are more likely to make strong environmental commitments and successfully implement sustainability initiatives due to their broader perspectives and deeper understanding of environmental issues (Ceres, 2019). Additionally, boards with a diverse mix of independence, gender, expertise, and nationality are better positioned to engage in meaningful deliberation and decision-making that enhances a firm's social responsibility approach (Otuya & Ofeimun, 2017). While environmental accountability has attracted increasing interest from both professionals and academics, much of the existing literature has focused on external monitoring mechanisms, often overlooking how board heterogeneity influences management's environmental decisions. Several studies (Galbreath, 2017; Harjoto, Laksmana, & Lee, 2015; Oh, Chang, & Jung, 2019; Sanan, 2018; Yaseen et al., 2019; Zhuang, Chang, & Lee, 2018) have examined board diversity and CSR in developed countries, but research remains limited in emerging markets. Importantly, the effect of board diversity on sustainability disclosure may be moderated by firm size. Larger firms typically have more resources, technical expertise, and external scrutiny, which can strengthen the influence of diverse boards on sustainability disclosure (Khan, Muttakin, & Siddiqui, 2013). In contrast, smaller firms often face resource constraints that limit the impact of board diversity on disclosure practices. The moderating influence of firm size on the relationship between board diversity and sustainability disclosure can be effectively explained through legitimacy theory and resource dependence theory. Legitimacy theory posits that larger firms, due to their heightened public visibility and broader stakeholder base, experience greater pressure to demonstrate socially responsible behavior, making comprehensive sustainability disclosure a critical strategy for maintaining legitimacy (Cormier & Magnan, 2007). Complementarily, resource dependence theory argues that larger firms, particularly those with diverse boards, are better equipped to secure vital external resources, build strategic alliances, and effectively respond to complex stakeholder demands, thereby improving their sustainability reporting practices (Hillman, Cannella, & Paetzold, 2000). Consequently, it is expected that the positive impact of board diversity on sustainability disclosure will be more pronounced in larger manufacturing firms, given their enhanced resource capabilities, greater external scrutiny, and stronger motivation to uphold a responsible corporate image. Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 169 Despite increasing global emphasis on sustainability and the recognized role of board diversity in enhancing corporate transparency, significant gaps remain in understanding how this relationship functions within the context of developing economies like Nigeria. Most existing studies have focused on developed countries, often overlooking the unique environmental, regulatory, and socio-economic challenges faced by emerging markets. Additionally, prior research has paid limited attention to how firm-level characteristics, particularly firm size, may moderate the effect of board diversity on sustainability disclosure. This study addresses these gaps by exploring the moderating role of firm size in the board diversity–sustainability disclosure nexus within Nigerian manufacturing firms. By integrating legitimacy theory and resource dependence theory, the study provides novel insights into how organizational context shapes the effectiveness of governance structures in promoting sustainability. The findings are expected to contribute to the literature by offering empirical evidence from an under-researched setting and guiding policymakers and corporate leaders in designing inclusive governance frameworks that foster transparency and accountability in high-impact industries. 2.0 Literature Review Board heterogeneity has increasingly become a central focus in corporate governance literature due to its potential influence on environmental performance. According to stakeholder theory, diverse boards are more likely to represent a broad range of stakeholder interests, leading to improved oversight and commitment to environmental and social responsibilities. For instance, independent directors, due to their professional image and ethical standards, tend to be more attuned to societal and environmental concerns (Webb, 2004). Their separation from day-to- day operations also allows for objective oversight, which is crucial for enhancing accountability in corporate environmental practices. Similarly, board diversity in terms of nationality brings in varied cultural perspectives, often resulting in heightened environmental awareness and engagement. Godos-Díez et al. (2018) affirm that dimensions such as board independence, gender diversity, professionalism, and nationality are pivotal in shaping how boards execute their governance responsibilities. Therefore, this study applies stakeholder theory to understand how these heterogeneity elements impact organizational environmental practices, proposing that greater board diversity should lead to improved environmental performance. Several studies have examined the relationship between board independence and environmental performance, yielding mixed findings. Alodia and Atmadja (2016) found no significant impact of board independence on environmental performance among Indonesian mining companies, whereas Harjoto et al. (2015), using stakeholder theory, reported a positive impact of independent directors in reducing environmental concerns across 1,489 U.S. firms. Abubakar (2016) reinforced this view by highlighting the relevance of board independence in promoting stakeholder engagement in environmental practices. Oh et al. (2019) further emphasized that independent directors positively influence environmental performance in professionally managed Korean firms. However, other studies have found contrary results. Adib and Xianzhi (2019), in a study of South African firms, and Awodiran (2018), in the Nigerian context, both reported negative relationships between board independence and environmental performance. Similarly, Galbreath (2017) found a significant negative impact using data from large Australian firms. Despite the varied outcomes, stakeholder theory suggests that independent directorswho are not part of executive managementserve as guardians of stakeholder interests, Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 170 including environmental sustainability (Coffey & Wang, 1998). Hence, this study proposes the hypothesis: H1: Board independence has a significant positive impact on environmental performance. Gender diversity in boardrooms also plays a critical role in enhancing corporate environmental accountability. Women directors are thought to improve moral legitimacy and responsiveness to environmental issues (Rao & Tilt, 2016; Nielsen & Huse, 2010). Empirical evidence supports this view, with Harjoto et al. (2015) showing that gender-diverse boards are more effective in monitoring environmental performance. Yaseen et al. (2019), employing the critical mass theory, found a significant positive effect of gender diversity on environmental performance in 89 French firms. Similarly, Abubakar (2016) and Awodiran (2018) found that gender diversity positively influences environmental engagement in Nigerian deposit money banks. In contrast, Alodia and Atmadja (2016) reported no significant effect among Indonesian mining firms, while Sanan (2018) reached a similar conclusion using Indian firms. Zhuang et al. (2018), drawing on upper echelon theory and analyzing 839 Chinese firms, found a negative impact of board gender diversity on environmental performance. Notably, the urgency of biodiversity conservation reinforces the importance of proactive environmental engagement. Boiral and Heras-Saizarbitoria (2017) and Farooq et al. (2021) argue that corporate biodiversity initiatives not only protect natural ecosystems but also mitigate financial risk, regulatory scrutiny, and reputational damage. Biodiversity preservation is crucial, particularly for industries reliant on natural resources like mining, tourism, and forestry, as neglecting these responsibilities could result in lawsuits, fines, or even loss of operating licenses. Consequently, the composition of the board, especially in terms of gender and diversity, remains a critical determinant of environmental stewardship. Agency Theory Agency theory, originally introduced by Jensen and Meckling (1976), provides a foundational framework for understanding the relationship between shareholders (principals) and corporate executives or managers (agents). In this relationship, shareholders delegate decision-making authority to managers to act in their best interest. However, due to information asymmetry and differing objectives, conflicts often arise (Campbell, 2003; Kleiman, 2011). This is particularly relevant in corporate governance where the board of directors, representing the shareholders, must monitor and guide management to ensure alignment with stakeholder interests, including environmental performance. In the context of this study, board heterogeneityreflected through board independence, gender diversity, professionalism, and nationalityis positioned as a governance mechanism that mitigates agency problems. Board independence, for example, introduces directors who are free from executive influence, enhancing the board’s ability to supervise environmental initiatives and corporate disclosures (Jensen & Meckling, 1976; Eisenhardt, 1989). Independent directors, by acting as objective monitors, help reduce managerial discretion that may lead to underinvestment in long-term sustainability (Coffey & Wang, 1998; Harjoto et al., 2015). Similarly, board gender diversity improves board dynamics by adding varied ethical perspectives and greater responsiveness to environmental and stakeholder concerns, aligning managerial actions with societal expectations (Rao & Tilt, 2016; Yaseen et al., 2019). Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 171 Agency theory also underscores the need for transparency to bridge the information gap between management and stakeholders. According to Chaklader and Gulati (2015), firms may engage in voluntary environmental disclosure as a strategy to reduce agency costs and signal responsible behavior. Here, board professionalismreflected by directors with expertise and experienceplays a crucial role in fostering credible oversight, supporting strategic environmental planning, and ensuring accurate disclosure of environmental performance (De Villiers et al., 2011). Moreover, board nationality diversity enriches the decision-making process by integrating global perspectives on sustainability, leading to stronger environmental governance that aligns with international standards and stakeholder expectations. To resolve agency dilemmas, firms may adopt monitoring mechanisms such as forming a diverse and capable board, enhancing ownership transparency, or engaging external auditors (Bushman & Smith, 2001). De Villiers et al. (2011) argue that boards not only monitor environmental activities but also oversee the integration of sustainability into corporate strategy. Consequently, heterogeneity in board composition serves not only as a monitoring tool but also as a strategic asset that enhances the firm’s legitimacy and stakeholder trust. Effective board diversity reduces agency costs, improves environmental accountability, and ultimately boosts firm performance through better environmental decisions. 3.0 Methodology The purpose of this study is to investigate the impact of board heterogeneity on environmental performance in the Nigerian manufacturing sector. To achieve this, a correlational research design was employed, aligned with the positivist research paradigm, which supports the use of objective measurement and statistical analysis to examine relationships among variables. The population for this study comprised all 97 manufacturing firms listed on the Nigerian Stock Exchange (NSE) as of December 31, 2020. Due to data availability constraintsparticularly concerning environmental disclosures and board compositionthe final sample included 68 firms with complete and reliable data from their annual reports covering 2012 to 2020. The manufacturing sector was selected due to its environmentally intensive operations and increasing public and regulatory scrutiny on sustainability practices. The chosen timeframe coincides with a growing policy and stakeholder emphasis on environmental accountability and board diversity in corporate governance. The dependent variable in this study is environmental performance, measured using the Global Reporting Initiative (GRI) index, which captures the extent and quality of environmental information disclosed in annual reports (Awodiran & Jimba, 2018). The explanatory variables focus on four dimensions of board heterogeneity, namely: i. Board Independence (BIND): Measured as the proportion of independent non-executive directors to the total number of board members each year (Abubakar, 2016). ii. Board Gender Diversity (BGEN): Measured as the proportion of female directors on the board per year (Oh et al., 2019). iii. Board Professionalism (BPRO): Measured as the number of board members with professional qualifications (e.g., ICAN, ACCA, CFA) divided by the total number of directors (Harjoto et al., 2015). Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 172 iv. Board Nationality Diversity (BNAT): Measured as the proportion of foreign nationals serving on the board to the total number of directors (Anazonwu, Egbunike, & Gunardi, 2018). The study includes firm size (FSZ) as the moderating variable, which is measured using total assets. Firm size serves as a proxy for the firm’s resource capacity and ability to engage in environmental initiatives. Larger firms are often under greater scrutiny and may have more resources to invest in sustainability, making it a critical control factor in evaluating board influence on environmental performance. 4.0 Result and Discussion Table 1: Descriptive Statistics of Study Variables Variable Mean Std. Dev. Minimum Maximum SUSDIS 0.202 0.198 0 0.833 BIND 0.08 0.143 0 0.50 BGEN 0.14 0.084 0 0.286 BPRO 0.137 0.113 0 0.375 BNAT 0.177 0.206 0 0.636 FSZ 9.973 2.538 6.000 14.000 Source: STATA OUTPUT, 2024. Table 1 presents the descriptive statistics for the key variables used in this study, focusing on the relationship between board heterogeneity and environmental performance among 68 manufacturing firms in Nigeria. The dependent variable, Sustainable Disclosure (SUSDIS)used as a proxy for environmental performance has a mean value of 0.202 and a standard deviation of 0.198, suggesting relatively low levels of environmental disclosure on average. The minimum value of 0 implies that some firms did not disclose any sustainability-related information, while the maximum of 0.833 indicates that even the highest disclosing firms reported only about 83% of the expected items based on the Global Reporting Initiative (GRI) index. The four board heterogeneity variables reveal the extent of diversity in the board composition of the sampled firms. Board Independence (BIND) has a low mean of 0.08, highlighting the limited presence of independent non-executive directors. Board Gender Diversity (BGEN) and Board Professionalism (BPRO) show moderate values of 0.14 and 0.137, respectively, suggesting that both gender inclusion and professional expertise on boards remain relatively limited. Board Nationality Diversity (BNAT) exhibits the highest variability, with a mean of Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 173 0.177 and a standard deviation of 0.206, reflecting some diversity in board membership by nationality but also considerable inconsistency across firms. Firm Size (FSZ), measured as the natural logarithm of total assets, is included in this study as a moderating variable, rather than just a control. With a mean of 9.973 and a standard deviation of 2.538, FSZ ranges from 6.000 to 14.000, indicating substantial variation in firm scale. The moderating role of firm size is important because larger firms typically possess more resources, experience greater regulatory and stakeholder scrutiny, and are more likely to invest in sustainable practices. As a moderator, FSZ may influence the strength or direction of the relationship between board heterogeneity and environmental performance, providing deeper insight into how firm characteristics shape sustainability outcomes. Table 2: Correlation Matrix Variable SUSDIS BIND BGEN BPRO BNAT FSZ SUSDIS 1.000 0.245 0.289 0.197 0.262 0.312 BIND 0.245 1.000 0.158 0.124 0.140 0.185 BGEN 0.289 0.158 1.000 0.110 0.096 0.172 BPRO 0.197 0.124 0.110 1.000 0.088 0.201 BNAT 0.262 0.140 0.096 0.088 1.000 0.145 FSZ 0.312 0.185 0.172 0.201 0.145 1.000 Source: STATA OUTPUT, 2024. The correlation matrix presented above provides insights into the strength and direction of linear relationships between the study variables. The dependent variable, Sustainable Disclosure (SUSDIS), shows a positive correlation with all four dimensions of board heterogeneity, as well as firm size (FSZ). Specifically, SUSDIS has the strongest correlation with FSZ (0.312), suggesting that larger firms are more likely to engage in sustainability disclosure. This supports the notion that resource availability and external pressure in larger organizations contribute to better environmental performance. Among the board characteristics, gender diversity (BGEN) and nationality diversity (BNAT) exhibit moderate positive correlations with SUSDIS (0.289 and 0.262, respectively), implying that diverse boards may be more inclined toward transparent sustainability practices. The correlations among the board heterogeneity variables themselves are generally low to moderate, indicating limited multicollinearity, which is favorable for regression analysis. For instance, the correlation between BGEN and BIND is 0.158, and between BPRO and BIND is 0.124, suggesting that these board attributes operate somewhat independently. This independence enhances the robustness of multivariate models, as each dimension can uniquely contribute to the explanation of variance in sustainability disclosure. Additionally, board Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 174 professionalism (BPRO) has a low to moderate positive correlation with FSZ (0.201), which may reflect that larger firms tend to appoint more professionally qualified directors. Diagnostic Tests To ensure the reliability and validity of the regression estimates, this study conducted several diagnostic tests in line with the econometric guidelines proposed by Wooldridge (2011). These diagnostics were essential to address potential violations of key classical assumptions and to guarantee that the estimated parameters were unbiased and efficient. The multicollinearity test, based on the correlation matrix, revealed no concerning relationships among the explanatory variables, as all correlation coefficients were well below the threshold of 0.7, indicating the absence of multicollinearity. The Hausman test was employed to determine the appropriate panel estimation technique between fixed effects and random effects models. The result of the test yielded a statistically significant p-value (0.0001), leading to the rejection of the null hypothesis in favor of the fixed effects model. This indicates that firm-specific effects are correlated with the explanatory variables and that the fixed effects model is more consistent and suitable for this study. Furthermore, a Shapiro-Wilk test was conducted to assess the normality of residuals. The result was statistically insignificant, implying that the residuals of the model are normally distributed. However, the Wooldridge test for autocorrelation in panel data indicated the presence of first- order autocorrelation, while the Modified Wald test for group-wise heteroskedasticity also returned a significant p-value (0.000), indicating a violation of the homoscedasticity assumption. To address these violationsautocorrelation and heteroskedasticitythis study applied the Panel-Corrected Standard Errors (PCSE) approach. The PCSE technique, as recommended by Gujarati (2004) and Mantobaye, William, and Rea (2017), corrects for heteroskedasticity and autocorrelation while maintaining robust standard error estimates. Accordingly, the results from the PCSE model are presented and discussed in the next section. Table 2: Summary of Diagnostic Tests Diagnostic Test Purpose Test Statistic / Method P-Value Decision / Interpretation Multicollinearity Test To check for high correlation among independent variables Correlation Matrix - No multicollinearity detected (all coefficients < 0.7) Hausman Test To choose between Fixed Effects and Random Effects model Hausman Chi- square Test 0.0001 Fixed Effects model selected (statistically significant) Normality Test of To confirm normal Shapiro-Wilk > 0.05 Residuals are normally distributed Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 175 Residuals distribution of residuals Test (not statistically significant) Autocorrelation Test To detect autocorrelation in panel data Wooldridge Test for Autocorrelation < 0.05 Presence of autocorrelation detected (statistically significant) Heteroskedasticity Test To test for constant variance in the residuals Modified Wald Test (Group- wise) 0.000 Presence of heteroskedasticity (homoscedasticity assumption violated) Estimation Technique to Correct Issues To address autocorrelation and heteroskedasticity Panel-Corrected Standard Errors (PCSE) - PCSE used as robust estimator following Gujarati (2004) and Mantobaye et al. (2017) Source: STATA OUTPUT, 2024. Table 3: PCSE Regression Results: Moderating Effect of Firm Size on the Relationship between Board Heterogeneity and Sustainability Disclosure (SUSDIS) Variables Coefficient Std. Error z- Statistic P- Value Significance Board Independence (BIND) 0.214 0.073 2.93 0.003 *** Board Gender Diversity (BGEN) 0.271 0.095 2.85 0.004 *** Board Professionalism (BPRO) 0.187 0.081 2.31 0.021 ** Board Nationality Diversity (BNAT) 0.205 0.068 3.01 0.003 *** Firm Size (FSZ) 0.143 0.057 2.51 0.012 ** BIND × FSZ 0.034 0.011 3.09 0.002 *** BGEN × FSZ 0.026 0.010 2.60 0.009 *** BPRO × FSZ 0.019 0.009 2.11 0.035 ** BNAT × FSZ 0.041 0.012 3.42 0.001 *** Constant -0.435 0.185 -2.35 0.019 ** Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 176 Observations 408 R-squared 0.537 Wald Chi-Square 112.74 Prob > Chi2 0.000 Source: STATA OUTPUT, 2024. The Panel-Corrected Standard Error (PCSE) regression results presented in the table above explore the effect of board heterogeneity on environmental performance (measured by sustainability disclosure, SUSDIS), while also incorporating the moderating effect of firm size (FSZ). The findings show a robust model fit, with an R-squared of 0.537, indicating that approximately 53.7% of the variation in sustainability disclosure across firms is explained by the combined influence of board heterogeneity characteristics and firm size. The Wald Chi- Square value of 112.74 with a p-value of 0.000 confirms the overall statistical significance of the model. Beginning with the main effects, all four board heterogeneity dimensions,Board Independence (BIND), Gender Diversity (BGEN), Professionalism (BPRO), and Nationality Diversity (BNAT)are statistically significant at the 5% level or better. Each has a positive coefficient, implying that greater presence of independent directors, women, professionally certified members, and foreign nationals on corporate boards positively influences sustainability disclosure practices among Nigerian manufacturing firms. Thus, the null hypotheses stating that these individual characteristics have no effect on SUSDIS are rejected. The model further integrates interaction terms between each board heterogeneity variable and firm size (FSZ) to examine moderation effects. These interaction termsBIND×FSZ, BGEN×FSZ, BPRO×FSZ, and BNAT×FSZare all statistically significant, confirming that firm size significantly strengthens the relationship between board heterogeneity and environmental performance. For instance, the coefficient of 0.041 on BNAT×FSZ implies that larger firms with diverse boards by nationality are more likely to disclose sustainability information. Therefore, the null hypotheses asserting that firm size does not moderate the relationship between board heterogeneity and SUSDIS are also rejected. The positive and significant coefficient for firm size (FSZ) on its own supports the notion that larger firms are more likely to engage in environmental disclosure due to greater visibility, regulatory scrutiny, and available resources. The significant constant term, although negative, should be interpreted within the full model context and interaction terms. It reflects the baseline level of SUSDIS when all independent variables are zero, which is not directly meaningful but statistically important in model construction. Discussion findings The results of the PCSE regression reveal that board independence (BIND) has a positive and statistically significant impact on sustainability disclosure (SUSDIS), validating H1. This Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 177 aligns with stakeholder theory, which posits that independent directors are more likely to advocate for the interests of external stakeholders, including environmental advocates. As argued by Webb (2004) and reinforced by Abubakar (2016), independent directors bring objectivity, ethical standards, and a commitment to transparency, which foster improved environmental accountability. Although some studies (e.g., Awodiran, 2018) have shown negative effects in different contexts, the positive finding here is consistent with Harjoto et al. (2015) and Oh et al. (2019), who emphasized the role of independent directors in reducing environmental risks and promoting sustainable practices across large firms. Similarly, board gender diversity (BGEN) exerts a significant positive influence on environmental performance, supporting H2 and resonating with both stakeholder theory and agency theory. From a stakeholder perspective, women bring diverse viewpoints and stronger ethical concerns, making boards more responsive to environmental issues (Rao & Tilt, 2016; Nielsen & Huse, 2010). This is particularly relevant in large firms, where stakeholder expectations are higher, as confirmed by the significant interaction between BGEN and firm size (FSZ). As proposed by Yaseen et al. (2019), and reflected in critical mass theory, the positive influence of women on boards becomes more evident when their presence is non- tokenistic, especially in large organizations with complex environmental footprints. Board professionalism (BPRO) also has a significant positive impact on sustainability disclosure, and its interaction with firm size strengthens this effect. This finding is well- supported by agency theory, which highlights the value of expertise and experience in reducing information asymmetry and enhancing board oversight. According to De Villiers et al. (2011) and Chaklader & Gulati (2015), professional directors play an instrumental role in ensuring credible reporting, strategic planning, and compliance with environmental standards. Their competence allows boards to not only fulfill their monitoring role but also contribute meaningfully to environmental strategy. In larger firms, where environmental risks are more complex and regulatory demands higher, the influence of professionalism is particularly critical. Lastly, the significant and positive relationship between board nationality diversity (BNAT) and environmental performance supports H4, affirming findings by Godos-Díez et al. (2018). As firms become more exposed to global sustainability norms and stakeholder pressures, especially in larger firms (as shown by the BNAT × FSZ interaction), boards composed of individuals with diverse national backgrounds offer broader cultural and regulatory insights. This diversity enhances decision-making and aligns environmental practices with international expectations. This supports the agency perspective that diverse boards serve as strategic assets for minimizing environmental risk and enhancing legitimacy in the eyes of global stakeholders. In sum, both theories and the cited literature collectively reinforce the study's conclusion that board heterogeneitywhen moderated by firm size significantly enhances environmental performance in Nigerian manufacturing firms. Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 178 5.0 Conclusion and Recommendation This study has provided compelling evidence that board heterogeneity significantly influences environmental performance in Nigerian manufacturing firms. Each dimension of board diversity independence, gender, professionalism, and nationalitypositively and significantly contributes to sustainability disclosure, a proxy for environmental performance. Importantly, firm size was found to significantly moderate these relationships, amplifying the positive effects of board heterogeneity. These results underscore the relevance of both stakeholder theory and agency theory in the Nigerian manufacturing context. Stakeholder theory supports the idea that diverse boards reflect and respond better to broader environmental and societal interests, while agency theory explains how such diversity enhances board oversight, reduces managerial opportunism, and improves alignment with long-term environmental goals. Thus, board heterogeneity should be viewed not merely as a governance formality but as a strategic driver of environmental accountability. Recommendations Manufacturing firms should update their corporate governance charters to explicitly require a minimum number of independent directors, female directors, and foreign or professionally certified members on their boards. For example, firms can set a target of at least 30% female representation and two independent directors with no executive affiliations. This ensures that board composition directly supports sustainability objectives. Larger firms with more resources should establish board sustainability sub-committees led by independent or professional directors with a background in environmental management or ESG. These sub-committees should meet quarterly to track environmental metrics, oversee sustainability reporting, and review regulatory complianceturning board diversity into action. Firms should partner with institutes like the Chartered Institute of Environmental Practitioners of Nigeria (CIEPN) and the Institute of Directors (IoD) to conduct biannual workshops for board members on emerging global environmental reporting standards (e.g., GRI, ISSB), carbon footprint auditing, and sustainable manufacturing practices. This improves both awareness and performance. Boards should implement internal environmental scorecards to track key sustainability KPIs (e.g., energy usage, emissions, waste management). These should be reviewed during board meetings and disclosed in annual sustainability reports or on corporate websites. Firms can also pursue certifications like ISO 14001 to build public trust. Manufacturing firms should organize annual susatianbility stakeholder roundtables involving shareholders, community leaders, regulators, and NGOs. These forums help identify social and environmental risks, align business goals with community expectations, and showcase board- led susatianbility initiatives, reinforcing transparency and external accountability. References Abubakar, A. (2016). Board characteristics and corporate social responsibility disclosure in Nigerian listed non-financial firms. Unpublished PhD Thesis, Universiti Utara Malaysia. Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 179 Abubakar, A. (2016). Firm attributes, board characteristics and environmental performance of listed deposit money banks In Nigeria. 1-110. Adib, M., & Xianzhi, Z. (2019). Board Characteristics and corporate social performance nexus- a multi-theoretical analysis. Evidence from South Africa, 21(1), 24-38. Available at: https://doi.org/10.9790/487X-2101042438. AirVisual. (2018). 2018 World Air Quality Report. Retrieved from https://www.iqair.com/world-air-quality-report Airvisual. (2018). The 2018 world air quality report. Alodia, I., & Atmadja, A. S. (2016). The effect of firm-characteristics and corporate governance on environmental performance and future firm performance. Amodu, T. (2017). Corporate social responsibility and the role of law: Towards a sustainable development strategy. Nigerian Journal of Corporate Law and Practice, 2(1), 1–20. Anazonwu, H. O., Egbunike, F. C., & Gunardi, A. (2018). Corporate board heterogeneity and sustainability reporting: A study of Sselected listed manufacturing firms in Nigeria. Indonesian Journal of Sustainability Accounting and Management, 2(1), 65-78. Anazonwu, H. O., Egbunike, P. A., & Gunardi, A. (2018). Corporate board diversity and sustainability reporting: A study of selected listed manufacturing firms in Nigeria. Indonesian Journal of Sustainability Accounting and Management, 2(1), 65–78. https://doi.org/10.28992/ijsam.v2i1.61 Awodiran, M. A. (2018). Corporate governance and sustainability disclosure: Evidence from listed industrial goods firms in Nigeria. 1–16. Awodiran, M. A., & Jimba, I. K. (2018). Board characteristics and environmental performance of listed firms in Nigeria. 1–25. Awodiran, O., & Jimba, K. L. (2018). Sustainability disclosure and firm performance: Evidence from Nigerian listed companies. International Journal of Accounting Research, 6(2), 1–10. Bear, S., Rahman, N., & Post, C. (2010). The impact of board diversity and gender composition on corporate social responsibility and firm reputation. Journal of Business Ethics, 97(2), 207–221. Bear, S., Rahman, N., & Post, C. (2010). The impact of board diversity and gender composition on corporate social responsibility and firm reputation. Journal of Business Ethics, 97(2), 207–221. https://doi.org/10.1007/s10551-010-0505-2 Bear, S., Rahman, N., & Post, C. (2010). The impact of board heterogeneity and gender composition on environmental performance and firm reputation. Journal of Business Ethics, 97(2), 207–221. Available at: https://doi.org/http://doi.org/10.1007/s10551-010- 0505-2. Braam, G. J., de Weerd, L. U., Hauck, M., & Huijbregts, M. A. (2016). Determinants of corporate environmental reporting: The importance of environmental performance and assurance. Journal of Cleaner Production, 129, 724-734. Available at: https://doi.org/10.1016/j.jclepro.2016.03.039. Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 180 Castelo Branco, M., & Lima Rodriques, L. (2007). Positioning stakeholder theory within the debate on environmental performance. EJBO-Electronic Journal of Business Ethics and Organization Studies, 12(1), 5-15. Ceres. (2019). How board governance can drive sustainability performance. Retrieved from: https://www.ceres.org/resources/reports/systems-rule-how-board-governance-can-drive- sustainability-performance. Ceres. (2019). Turning Point: Corporate Progress on the Ceres Roadmap for Sustainability. Retrieved from https://www.ceres.org/resources/reports/turning-point Coffey, B. S., & Wang, J. (1998). Board heterogeneity & managerial control as predictors of corporate social performance. Journal of Business Ethics, 17(14), 1595–1603. Cormier, D., & Magnan, M. (2007). The revisited contribution of environmental reporting to investors’ valuation of a firm’s earnings: An international perspective. Ecological Economics, 62(3-4), 613–626. Cormier, D., & Magnan, M. (2007). The revisited contribution of environmental reporting to investors' valuation of a firm's earnings: An international perspective. Ecological Economics, 62(3–4), 613–626. https://doi.org/10.1016/j.ecolecon.2006.07.030 Dixon, R., Mousa, G. A., & Woodhead, A. (2005). The role of environmental initiatives in encouraging companies to engage in environmental reporting. European Management Journal, 23(6), 702-716. Figar, N., & Figar, V. (2011). Corporate social responsibility in the context of the stakeholder theory. Facta universitatis-series: Economics and Organization, 8(1), 1-13. Galbreath, J. (2017). Is board gender diversity linked to financial performance? The mediating mechanism of CSR. Business & Society, 57(5), 863–889. https://doi.org/10.1177/0007650315615812 Galbreath, J. (2017). The impact of board structure on environmental performance: A temporal view. Business Strategy and the Environment, 26(3), 358-370. Godos-Díez, J.-L., Cabeza-García, L., Alonso-Martínez, D., & Fernández-Gago, R. (2018). Factors influencing board of directors’ decision-making process as determinants of environmental engagement. Review of Managerial Science, 12(1), 229-253. Gul, F. A., & Leung, S. (2004). Board leadership, outside directors’ expertise and voluntary corporate disclosures. Journal of Accounting and Public Policy, 23(5), 351-379. Hair, J. J., Black, W., Babin, B., & Anderson, R. (2014). Multivariate data analysis. Georgia: Harlow, United Kingdom: Pearson. Harjoto, M. A., Laksmana, I., & Lee, R. (2015). Board diversity and corporate social responsibility. Journal of Business Ethics, 132(4), 641–660. https://doi.org/10.1007/s10551-014-2343-0 Harjoto, M., Laksmana, I., & Lee, R. (2015). Board heterogeneity and environmental performance. Journal of Business Ethics, 132(4), 641–660. Available at: https://doi.org/10.1007/sl0551-014-2343-0. Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 181 Hillman, A. J., Cannella, A. A., & Paetzold, R. L. (2000). The resource dependence role of corporate directors: Strategic adaptation of board composition in response to environmental change. Journal of Management Studies, 37(2), 235–255. Hillman, A. J., Cannella, A. A., & Paetzold, R. L. (2000). The resource dependence role of corporate directors: Strategic adaptation of board composition in response to environmental change. Journal of Management Studies, 37(2), 235–256. https://doi.org/10.1111/1467-6486.00179 Ibrahim, N. A., & Angelidis, J. P. (1995). The corporate social responsiveness orientation of board members: Are there differences between inside and outside directors? Journal of Business Ethics, 14(5), 405-410. Ibrahim., A. H., & Hanefah, M. M. (2016). Board heterogeneity and environmental performance in Jordan. Journal of Financial Reporting and Accounting, 14(2), 279 – 298. Available at: https://doi.org/http://dx.doi.org/10.1108/JFRA-06-2015-0065. Iredele, D. O., & Akinlo, O. O. (2015). Corporate environmental disclosures and market value of quoted companies in Nigeria. The Business & Management Review, 6(3), 231–240. Khan, A., Muttakin, M. B., & Siddiqui, J. (2013). Corporate governance and corporate social responsibility disclosures: Evidence from an emerging economy. Journal of Business Ethics, 114(2), 207–223. Khan, A., Muttakin, M. B., & Siddiqui, J. (2013). Corporate governance and corporate social responsibility disclosures: Evidence from an emerging economy. Journal of Business Ethics, 114(2), 207–223. https://doi.org/10.1007/s10551-012-1336-0 KPMG. (2020). The Time Has Come: The KPMG Survey of Sustainability Reporting 2020. Retrieved from https://home.kpmg/xx/en/home/insights/2020/11/the-time-has-come- survey-of-sustainability-reporting.html Legit. (2017). Pollution in Nigeria: Causes, effects and solutions. Retrieved from https://www.legit.ng/1125521 Mantobaye, M., William, S., & Rea, W. R. R. (2017). 1. Which panel data estimator should I use. Minguel, N. G. G. E. (2017). The evolution of sustainability reporting A case study of the airlines sector. National Oil Spill Detection and Response Agency (NOSDRA). (2020). Oil Spill Incidents March 2020. Retrieved from https://nosdra.gov.ng/oil-spill-data Nielsen, S., & Huse, M. (2010). The contribution of women on boards of directors: Going beyond the surface. Corporate Governance: An International Review, 18(2), 136-148. Nigeria Extractive Industries Transparency Initiative (NEITI). (2020). 10-Year Audit Report on Oil and Gas Sector Losses. Retrieved from https://neiti.gov.ng Nosakhare, E. (2019). Environmental accounting and firm performance of listed oil and gas companies in Nigeria. International Journal of Accounting Research, 7(1), 1–8. Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 182 Oba, V. C., & Fodio, M. I. (2012). Board characteristics and the quality of environmental reporting in Nigeria: A theoretical framework. Journal of Accounting and Taxation, 4(8), 131–138. https://doi.org/10.5897/JAT12.015 Oh, W. Y., Chang, Y. K., & Jung, R. (2019). Board heterogeneity and corporate social responsibility: Evidence from Korea. Sustainability, 11(6), 1556. https://doi.org/10.3390/su11061556 Oh, W.-Y., Chang, Y. K., & Jung, R. (2019). Board characteristics and environmental performance: Does family involvement in management matter? Journal of Business Research, 103, 23-33. Available at: https://doi.org/10.1016/j.jbusres.2019.05.028. Okpala, K. E. (2019). The effects of sustainability reporting on financial performance of selected quoted firms in Nigeria. Journal of Accounting and Financial Management, 5(1), 1–11. Otuya, S., & Ofeimun, G. (2017). Effects of board globalizing on financial performance of banks in Nigeria. International Journal of Academic Research in Accounting, Finance and Management Sciences, 7(4), 1-10. Otuya, S., & Ofeimun, O. (2017). Board characteristics and corporate social responsibility of quoted firms in Nigeria. International Journal of Social Sciences and Humanities Review, 7(1), 48–58. Post, C., Rahman, N., & Rubow, E. (2011). Green governance: Boards of directors’ composition and environmental corporate social responsibility. Business & Society, 50(1), 189–223. Post, C., Rahman, N., & Rubow, E. (2011). Green governance: Boards of directors’ composition and environmental corporate social responsibility. Business & Society, 50(1), 189–223. https://doi.org/10.1177/0007650310394642 Rao, K., & Tilt, C. (2015). Board composition and environmental performance: The role of diversity, gender, strategy and decision making. Journal of Business Ethics. Rao., K., & Tilt, C. (2016). Board composition and environmental performance: The role of diversity. Gender, Strategy and Decision Making, 138(2), 327–347. Available at: https://doi.org/10.1007/sl0551-015-2613-5. Roberts, R. W. (1992). Determinants of environmental performance disclosure: An application of stakeholder theory. Accounting, Organizations and Society, 17(6), 595-612. Available at: https://doi.org/10.1016/0361-3682(92)90015-k. Rupley, K. H., Brown, D., & Marshall, R. S. (2012). Governance, media and the quality of environmental disclosure. Journal of Accounting and Public Policy, 31(6), 610-640. Sanan, N. K. (2018). Board composition and corporate social responsibility: The case of Indian firms. Journal of Indian Business Research, 10(2), 132–152. https://doi.org/10.1108/JIBR-12-2016-0142 Sanan, N. K. (2018). Influence of board characteristics on environmental: A study of Indian firms. International Journal of Corporate Governance, 9(3), 300-315. Gusau Journal of Accounting and Finance, Vol.6, Issue 2, April, 2025 183 Tan, A., Benni, D., & Liani, W. (2016). Determinants of environmental performance disclosure and investor reaction. International Journal of Economics and Financial Issues, 6(4S), 11–17. UNEP. (2011). Environmental Assessment of Ogoniland. United Nations Environment Programme. Retrieved from https://www.unep.org UNEP. (2014). Keeping Track of Our Changing Environment: From Rio to Rio+20 (1992– 2012). United Nations Environment Programme. Retrieved from https://www.unep.org Webb, E. (2004). An examination of socially responsible firms’ board structure. Journal of Management and Governance, 8, 255–277. Available at: https://doi.org/10.1007/s10997-004-1107-0. Wooldridge, J. M. (2011). Introductory Econometrics. Journal of Contaminant Hydrology. World Bank. (2019). Global gas flaring reduction partnership. World Bank. (2020). Global Gas Flaring Reduction Partnership (GGFR) Report. Retrieved from https://www.worldbank.org/en/programs/gasflaringreduction Yao, S., Wang, J., & Song, L. (2011). Determinants of social responsibility disclosure by Chinese firms. Discussion Paper 72. China Policy Institute, The University of Nottingham. Yaseen, H., Dajani, D., & Hasan, Y. (2019). Board diversity and corporate social responsibility: Evidence from Jordan. Social Responsibility Journal, 15(7), 863–881. https://doi.org/10.1108/SRJ-06-2017-0115 Yaseen, H., Iskandrani, M., Ajina, A., & Hamad, A. (2019). Investigating the relationship between board heterogeneity & environmental performance (Csr) performance: Evidence from France. Academy of Accounting and Financial Studies Journal, 23(4), 1- 11. Zhuang, H., Chang, H., & Lee, Y. (2018). Board composition and corporate social responsibility performance: Evidence from Chinese publicly listed firms. Sustainability, 10(8), 2752. https://doi.org/10.3390/su10082752 Zhuang, Y., Chang, X., & Lee, Y. (2018). Board composition and environmental performance performance: Evidence from Chinese Public Firms. Sustainability, 10(8), 1-12. Available at: https://doi.org/10.3390/su10082752.