Impact of Environmental, Social, and Governance Accounting on Firms' Profitability and Cash Flow In Nigeria

International Journal of Economics and Management Studies

© 2020 by SSRG - IJEMS Journal

Volume 7 Issue 12

Year of Publication : 2020

Authors : Ndifon Ojong Ejoh

10.14445/23939125/IJEMS-V7I12P122

How to Cite?

Ndifon Ojong Ejoh, "Impact of Environmental, Social, and Governance Accounting on Firms' Profitability and Cash Flow In Nigeria," SSRG International Journal of Economics and Management Studies, vol. 7,  no. 12, pp. 152-159, 2020. Crossref, https://doi.org/10.14445/23939125/IJEMS-V7I12P122

Abstract:

This paper examines the implications of Environmental, Social and Governance (ESG) Dimensions of corporate social responsibility (CSR) performance on firms' profitability (Returns on Assets - ROA) and Cash Flows (Cash Flows Per Share - CFPS) for eight (8) manufacturing firms listed on Nigerian Stock Exchange from 2009 to 2018. The study found that, on average, increased ESG practice is positively associated with firm performance. Environmental and governmental dimensions and practices positively and significantly affect ROA and CFPS, while the Social dimension negatively and significantly affects ROA and CFPS. The study further revealed that the social dimension's negative effect results from investment in community development and philanthropy. It is concluded that overall, high and quality ESG practices improve corporate financial performance in the manufacturing industry in Nigeria. Therefore, it was recommended that managers of manufacturing firms invest in higher environmental, social and Governance performance to reap higher profitability and cash flow performance.

Keywords:

Environmental performance, Social Performance, Governance Performance, Profitability, Cash flows.

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