Green Accounting and Corporate Profitability: An Empirical Assessment of Selected Downstream Oil and Gas Firms in Nigeria

Abstract

Green accounting is advocated and promoted globally in response to the increasing deterioration of the environment resulting from business activities. Hence this study is focused on investigating whether there is any significant relationship between green accounting and profitability of downstream oil and gas firms in Nigeria. Data for this research study were secondary data generated from the annual reports and accounts of Six (6) randomly selected quoted oil and gas firms operating in the downstream sector that are into marketing and distribution of oil and gas. The annual reports covers a period of five years from 2012 – 2016 and the study was based on ex- post facto research design as the data already existed. The data collected were analyzed using descriptive statistics and correlation matrix. The ordinary least square was used to evaluate the strength of the relationship between green cost accounting (predictor variable) and profitability (criterion variable). Key findings of the study show that waste management cost has a significant effect on profitability while legal cost and penalties as well as pollution control cost have no significant effect on the profitability of downstream oil and gas firms in Nigeria. Based on the findings and the conclusion drawn, the study recommends among others that companies operating in the downstream oil and gas sector should give keen attention to waste management cost when formulating green cost accounting policy as empirical evidence indicate that there is a correlation between these costs and profitability

Keywords

• Green accounting
• profitability
• waste management cost
• pollution control cost

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