CORPORATE SOCIAL AND ENVIRONMENTAL PERFORMANCE, CONSERVATIVE ACCOUNTING PRACTICES AND THE MARKET VALUE OF LISTED FIRMS IN NIGERIA
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Corporate environmental and social activities are expected to improve the value of firms in the
long term. However, when corporate social and environmental performance activities
negatively affect a firm's value, as some reviewed studies revealed, this causes problems when
rational decisions are made, and firms choose not to invest in these activities. This disparity in
results was successfully explained by certain factors like the level of conservative accounting
practice inherent in the preparation of financial reports. The study introduced a moderator
(conservative accounting practices) to analyse its effect on corporate social and environmental
performance and the market value of listed firms in Nigeria. Also, the study examined firms
separately based on their environmental sensitivity categorisation. One hundred and thirty-one
firms listed in the Nigerian Exchange Group were examined across the eleven sectors with sixyear
observations (2014 2019). Data were collected from secondary sources such as annual
reports, sustainability reports, websites and any publication by the examined companies. Panel
least square regression was employed as a data analysis method for testing hypotheses. The
findings revealed an insignificant influence of corporate environmental and social performance
on the market value separately. This result reveals that social and environmental performance
activities are insufficient to impact firm value. The findings also revealed an insignificant
influence of conservative accounting practice on the market value. When the study introduced
conservative accounting practice as a moderator, the results revealed the complementary
moderating influence of conservative accounting practices on the value of environmental
The results also revealed the moderating influence of conservative accounting practices on the
significance. These results are in line with the A-priori expectation. The thesis recommends
that conservative accounting practices be engaged when firms are involved in social and
environmental activities because of their moderating effect, and conservative accounting
practices improve reporting quality. Managers are expected to increase their social and
environmentally friendly activities to improve the significance of their influence on the value
of their firms. Because of their positive coefficient, environmental activities such as product
innovations should be focused on. However, one of the policy implications encourages the
manager to ensure that the financial and non-financial cost of engaging in socially and
environmentally friendly activities in Nigeria is not detrimental to the going concern of the
business.
Keywords
HF Commerce, HF5601 Accounting