Green Accounting Practices and Financial Performance: Empirical Evidence from Listed Manufacturing Firms in Nigeria
S. O. Yinus
Department of Accounting, Faculty of Management Sciences, Open and Distance Learning, Ladoke Akintola University of Technology, Oyo State, Nigeria.
E. A. Alagbe *
Department of Accounting, Faculty of Management Sciences, Ladoke Akintola University of Technology, Oyo State, Nigeria.
*Author to whom correspondence should be addressed.
Abstract
Green accounting integrates environmental costs into financial reporting, promoting sustainability alongside economic performance, especially in environmentally intensive sectors like transportation. It helps firms improve long-term financial performance, regulatory compliance, and environmental accountability while supporting global sustainability goals. This study investigates the effect of green accounting practices on the corporate performance of listed manufacturing firms in Nigeria, with particular focus on environmental waste management and pollution control practices. The study is premised on the growing demand for corporate environmental accountability and the need to ascertain whether sustainability-oriented reporting enhances financial outcomes. An ex-post facto research design was adopted, using secondary panel data obtained from the annual reports of ten purposively selected firms listed on the Nigerian Exchange Group (NGX) over the period 2011–2025. Descriptive statistics, correlation analysis, and panel regression techniques were employed to examine the relationships among the variables. Fixed Effects and Random Effects models were estimated, while the Dynamic Panel System Generalized Method of Moments (GMM) was applied to address potential endogeneity and firm-specific heterogeneity. The Hausman test supported the Fixed Effects model as the most appropriate specification. The findings reveal that environmental waste management practices have a positive and statistically significant impact on return on assets (ROA) and return on equity (ROE), indicating that firms with stronger waste management transparency tend to achieve superior financial performance. The results further indicate that environmental pollution control practices are positively related to performance indicators.
The study concludes that effective green accounting practices enhance financial performance. This finding is consistent with the assumptions of the Resource Based View (RBV) theory, which emphasizes the linkage between environmental practices and financial performance. The implication of this study is that proactive environmental investments and transparent sustainability reporting can serve as strategic resources that improve competitiveness, strengthen stakeholder confidence, and promote long-term financial sustainability for manufacturing firms. The study therefore recommends that firms integrate environmental strategies into their operational frameworks and that policymakers enforce environmental practice regulations to ensure environmental accountability and sustainable profitability.
Keywords: Green accounting, environmental practice, financial performance, panel data