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Effect of Environmental Cost on Financial Performance of Listed Oil and Gas Firms in Nigeria

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  • June 25, 2026
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Festus Ndubuisi Nkwo1 & Eneh, Sylvia Nnenna, Ph.D., TRCN, ACA2*

Abstract         

This study examined the effect of environmental cost on the financial performance of listed oil and gas firms in Nigeria. The broad objective was to ascertain how environmental cost disclosures relate to firm profitability, while the specific objectives assessed the effect of environmental costs, environmental losses, and environmental liabilities on Return on Assets (ROA). The study adopted an ex-post facto research design anchored on secondary data extracted from the audited annual reports and accounts of five purposively selected oil and gas firms quoted on the Nigerian Exchange Group (NGX) — Conoil Nigeria Plc, Mobil Oil Nigeria Plc (now 11Plc), Forte Oil Nigeria Plc (now Ardova Plc), MRS Oil Nigeria Plc, and Total Petroleum Nigeria Plc (now TotalEnergies Marketing Nigeria Plc) — covering the period 2009 to 2023. Panel data regression, comprising pooled OLS, fixed effects, and random effects estimators, was employed, with the Hausman specification test used to select the appropriate model, while diagnostic tests (unit root, multicollinearity, heteroscedasticity, and serial correlation) were conducted to validate the robustness of the results. Findings revealed that environmental cost and environmental liabilities had a statistically significant negative effect on ROA, while environmental losses exerted a significant positive effect on ROA among the sampled firms. The study concludes that environmental cost disclosure practices materially affect the financial performance of Nigerian oil and gas firms and recommends that regulatory bodies such as the Financial Reporting Council of Nigeria (FRCN) and the National Environmental Standards and Regulations Enforcement Agency (NESREA) strengthen mandatory environmental cost disclosure frameworks to enhance transparency and long-term firm value.

Keywords: Environmental cost, Environmental liabilities, Environmental losses, Financial performance, Return on Assets, Oil and gas firmsCite: Festus, N. N. & Eneh, S. N.(2026). Effect of Environmental Cost on Financial Performance of Listed Oil and Gas Firms in Nigeria. International Journal of Accounting Research and Financial Insights,4(4), 299-310.https://doi.org/10.5281/zenodo.20788933

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