Environmental Accounting Disclosures and Profitability in Nigerian Listed Oil and Gas Companies: A Dynamic Analysis

Abstract

This study investigates the effect of Environmental Accounting Disclosures (EAD) on the profitability of listed oil and gas companies in Nigeria over the period 2015–2024. Using panel data from six sampled firms, the research employs a dynamic panel data approach with the Generalized Method of Moments (GMM) to account for the persistence of profitability and potential endogeneity between financial performance and environmental disclosures. The findings reveal that environmental policy disclosures have a strong and positive effect on profitability (β = 1.081, p = 0.001). Conversely, waste management practices negatively affect profitability in the short term (β = –0.298, p < 0.001). Greenhouse gas emissions disclosures exhibit a positive but statistically insignificant effect (β = 0.347, p = 0.225). Additionally, firm size positively influences profitability (β = 0.246, p < 0.001), while leverage exerts a negative effect (β = –0.266, p = 0.005). The study concludes that strategic environmental transparency, particularly through policy-level disclosures, can enhance firm performance. Recommendations include strengthening environmental governance, adopting cost-efficient waste management technologies, and improving the quality of carbon reporting to align with global sustainability standards.