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Accounting for Externalities and Financial Performance of Listed Industrial Goods Companies in Nigeria

Received: 22 April 2024     Accepted: 10 May 2024     Published: 6 June 2024
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Abstract

Good financial performance of companies gives confidence to shareholders and investors on returns on their investment and guaranteed going concern. However, literature has shown that poor financial performance has made some companies to lose their competitive edge, and inability to achieve growth objective. Accounting for and reporting firms’ externalities impact is becoming increasingly important globally, investors have raised the bar on what they consider material to the performance of their investments, expectation of long-term profitability and sustainability of the company. This study examined the effect of accounting for externalities on financial performance proxied by Return on Asset (ROA)) of listed industrial goods in Nigeria. The study adopted Ex-post facto research design. The population for the study comprised of fifteen (15) Industrial Goods companies listed on Nigeria Stock Exchange as at 31st December, 2021. The Panel data were sourced from audited annual reports for the period of ten (10) years spanning from 2012-2021. Data were analyzed using descriptive and inferential statistics. The findings of the study revealed that accounting for externalities had significant effect on ROA (AdjR2 =0.6010, F (3,96) = 3.99**; p = 0.0100). The study concluded that accounting for externalities has significant effect on financial performance of listed industrial goods companies in Nigeria. It was recommended that standard-setting bodies in Nigeria like the Financial Reporting Council of Nigeria should develop mandatory guidelines and standards for accounting and reporting of externalities to foster a more sustainable and responsible business environment.

Published in International Journal of Accounting, Finance and Risk Management (Volume 9, Issue 2)
DOI 10.11648/j.ijafrm.20240902.11
Page(s) 46-54
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Economic Costs, Environmental Cost, Externalities, Return on Asset, Social Costs

References
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Cite This Article
  • APA Style

    Adesemowo, M. M., Adegbie, F. F., Fijabi, K. L., Tawiah, O. J. (2024). Accounting for Externalities and Financial Performance of Listed Industrial Goods Companies in Nigeria. International Journal of Accounting, Finance and Risk Management, 9(2), 46-54. https://doi.org/10.11648/j.ijafrm.20240902.11

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    ACS Style

    Adesemowo, M. M.; Adegbie, F. F.; Fijabi, K. L.; Tawiah, O. J. Accounting for Externalities and Financial Performance of Listed Industrial Goods Companies in Nigeria. Int. J. Account. Finance Risk Manag. 2024, 9(2), 46-54. doi: 10.11648/j.ijafrm.20240902.11

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    AMA Style

    Adesemowo MM, Adegbie FF, Fijabi KL, Tawiah OJ. Accounting for Externalities and Financial Performance of Listed Industrial Goods Companies in Nigeria. Int J Account Finance Risk Manag. 2024;9(2):46-54. doi: 10.11648/j.ijafrm.20240902.11

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  • @article{10.11648/j.ijafrm.20240902.11,
      author = {Modupeola Morenike Adesemowo and Folajimi Festus Adegbie and Kolawole Lateef Fijabi and Oladapo John Tawiah},
      title = {Accounting for Externalities and Financial Performance of Listed Industrial Goods Companies in Nigeria
    },
      journal = {International Journal of Accounting, Finance and Risk Management},
      volume = {9},
      number = {2},
      pages = {46-54},
      doi = {10.11648/j.ijafrm.20240902.11},
      url = {https://doi.org/10.11648/j.ijafrm.20240902.11},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20240902.11},
      abstract = {Good financial performance of companies gives confidence to shareholders and investors on returns on their investment and guaranteed going concern. However, literature has shown that poor financial performance has made some companies to lose their competitive edge, and inability to achieve growth objective. Accounting for and reporting firms’ externalities impact is becoming increasingly important globally, investors have raised the bar on what they consider material to the performance of their investments, expectation of long-term profitability and sustainability of the company. This study examined the effect of accounting for externalities on financial performance proxied by Return on Asset (ROA)) of listed industrial goods in Nigeria. The study adopted Ex-post facto research design. The population for the study comprised of fifteen (15) Industrial Goods companies listed on Nigeria Stock Exchange as at 31st December, 2021. The Panel data were sourced from audited annual reports for the period of ten (10) years spanning from 2012-2021. Data were analyzed using descriptive and inferential statistics. The findings of the study revealed that accounting for externalities had significant effect on ROA (AdjR2 =0.6010, F (3,96) = 3.99**; p = 0.0100). The study concluded that accounting for externalities has significant effect on financial performance of listed industrial goods companies in Nigeria. It was recommended that standard-setting bodies in Nigeria like the Financial Reporting Council of Nigeria should develop mandatory guidelines and standards for accounting and reporting of externalities to foster a more sustainable and responsible business environment.
    },
     year = {2024}
    }
    

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  • TY  - JOUR
    T1  - Accounting for Externalities and Financial Performance of Listed Industrial Goods Companies in Nigeria
    
    AU  - Modupeola Morenike Adesemowo
    AU  - Folajimi Festus Adegbie
    AU  - Kolawole Lateef Fijabi
    AU  - Oladapo John Tawiah
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    T2  - International Journal of Accounting, Finance and Risk Management
    JF  - International Journal of Accounting, Finance and Risk Management
    JO  - International Journal of Accounting, Finance and Risk Management
    SP  - 46
    EP  - 54
    PB  - Science Publishing Group
    SN  - 2578-9376
    UR  - https://doi.org/10.11648/j.ijafrm.20240902.11
    AB  - Good financial performance of companies gives confidence to shareholders and investors on returns on their investment and guaranteed going concern. However, literature has shown that poor financial performance has made some companies to lose their competitive edge, and inability to achieve growth objective. Accounting for and reporting firms’ externalities impact is becoming increasingly important globally, investors have raised the bar on what they consider material to the performance of their investments, expectation of long-term profitability and sustainability of the company. This study examined the effect of accounting for externalities on financial performance proxied by Return on Asset (ROA)) of listed industrial goods in Nigeria. The study adopted Ex-post facto research design. The population for the study comprised of fifteen (15) Industrial Goods companies listed on Nigeria Stock Exchange as at 31st December, 2021. The Panel data were sourced from audited annual reports for the period of ten (10) years spanning from 2012-2021. Data were analyzed using descriptive and inferential statistics. The findings of the study revealed that accounting for externalities had significant effect on ROA (AdjR2 =0.6010, F (3,96) = 3.99**; p = 0.0100). The study concluded that accounting for externalities has significant effect on financial performance of listed industrial goods companies in Nigeria. It was recommended that standard-setting bodies in Nigeria like the Financial Reporting Council of Nigeria should develop mandatory guidelines and standards for accounting and reporting of externalities to foster a more sustainable and responsible business environment.
    
    VL  - 9
    IS  - 2
    ER  - 

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