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 |
Economic Costs, Environmental Cost, Externalities, Return on Asset, Social Costs
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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
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
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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Download@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}
}
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 Y1 - 2024/06/06 PY - 2024 N1 - https://doi.org/10.11648/j.ijafrm.20240902.11 DO - 10.11648/j.ijafrm.20240902.11 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 -
Department of Accounting, Chrisland University, Abeokuta, Nigeria
Department of Accounting, Babcock University, Ilisan-Remo, Nigeria
Department of Accounting, Precious Cornerstone University, Ibadan, Nigeria
Department of Accounting, Precious Cornerstone University, Ibadan, Nigeria
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