INTEGRACIÓN DE L AS SALAS DE RE DACCIÓN

196

The study evaluates effect of sustainability disclosures on performance of quoted non financial firms in Nigeria from 2006 – 2015. Data obtained from annual reports of sampled firms were analysed using pooled ordinary least square regression with the aid of STATA software 13.0 version. Hypotheses was tested for acceptance or rejection using models 1 – 4. Version (a) and (b) of models 1 – 3 were used to generate disclosures index from companies specific disclosures through Principal component analysis while version (c) and (d) was used to test the hypotheses 1 - 3. To test hypothesis 4, model 4a and 4b were used. Before the data were used to test the hypotheses, they were subjected to some diagnostic tests to confirm regression assumptions. Both results of the diagonostic tests, regression ressults for specific disclosures used for generating disclosure index and regression results for testing the four hypotheses of this study were all discussed below:

4.4.1 Diagnostic Test to Confirm the Assumptions of Classical Regression

The descriptive statistics for environmental sustainability disclosures on Table 4.1 showed that on the average, there is a fair level of compliance to environmental policy among quoted companies in Nigeria.

This is an indication from the mean value of (encompo) 58% which may be likely related to the fact that government policies on environmental sustainability are not mandatory, hence strict adherence is not in force. For the variable of environmental sensitive products, the statistics show that only a few firms in our sample of study produces environmental sensitive products hence we expect the volume of emission to be relatively low compared to countries where companies whose environmental sensitive products is in large quantities. This is supported by the mean value of environmental sensitive products (ensprod) 14%. Furthermore the statistics from the variable of environmental conservative disclosure (envconsd) 6% indicates a very low level of environmental conservation disclosure in Nigeria. Again this may align with the fact that there are no formal guidelines that require quoted companies in Nigeria to disclose environmental issues are complied with. As seen from the mean value of the variable of environmental donations (engycon=13%) from the descriptive statistics result, it reveals that reports of environmental related donations have been performed by only thirteen percent of quoted companies under consideration. This result is similar to the work of Behram (2015) which found that 50 percent of sampled firms in Turkey disclose environmental informantion. The finding of this study is a complete deviation from the work of Hook & Thompson (2013) where 81 percent of the sampled companies in the UK showed consistency in reporting of environmental related information. Finally here, the descriptive statistics revealed that on the average firm acquisition of plant and machines capable of using energy and also polluting the environment is relatively high. This is captured by the elasticity of the variable of engycon 6.4 while the maximum level of such acquisition stood at 8.96 during the period of study. These findings indicate that companies in Nigeria are yet to abide by suggestions concerning successful management of carbon emission: that energy efficiency and conservation are very essential

197

components of policies for addressing emerging concerns on energy security and the reduction of greenhouse gas emissions (Edeoja & Edeoja, 2015; Otene, Murray, & Enongene 2016).

Descriptive statistics for social sustainability disclosures on table 4.2 reveal that on the average the companies under review contributed only 5% of its ratio of total financial social donation to firm total asset into the pool of social donations (socdon) while the maximum donation rose to 78% during the period under review. Interestingly the result reveals that some companies did not make any donations.

The variable of disclosure of community social responsibility (disocr) reveals that on the average 42%

of the sampled firms disclosed its activities relating to corporate community social responsibility. This implies that 68% percent of these business entities do not follow best practice which may be seen as a failure on the path of corporate managers. Disclosure of donations and charity gifts is seen to be encouraged by almost all the firms under review. This is obtained from the mean value of (discgft) 92%

and indicates that less than 10% of the sampled companies do not disclose such items in its financial statement. This result is pretty true since most organization employ this strategy as a medium of advertising a good public image (Adeneye & Ahmed, 2015; Stuebs & Sun, 2011). In disclosing information on human resources and employee relations the variable of (hrempr) 98% indicates that on the average only about 2% of the companies in this study do not disclose information concerning activities on human resources and employee relations in its reports. Meanwhile, the variable of Job Creation (jobcr) revealed a minimum value of 0.66 with a maximum value of 4.28. However, the average value revealed by this variable stood at 2.52. The variable of investment in employee (invemp) showed an average value of 0.02 which is an indication that most of the companies in this study have a low input towards investing in its employees. Although some companies showed a 22% involvement to its employees‘ needs. This is obtained from the maximum value of the variable of investment in employee (invemp). From the descriptive statistics, information on employee health, safety and welfare is revealed to be disclosed by almost all the firm under consideration during the period of study. This is obtained from the variable statistic of (ehswdis) 98% noting that quoted companies in Nigeria are now beginning to show awareness towards the benefits of such disclosure in its annual reports.

Descriptive statistics for corporate governance sustainability disclosures on table 4.3 show that the largest board in the sample during the period under review had seventeen (17) members, while on the average most of the companies had a board size of nine (9) members which indicates that most of sampled companies have moderate board size. The variable of board independence reveals that 64% of the sampled firms had more independent directors than dependent directors in their board. This again is a good fit as this could mean that quoted firms in Nigeria do want to meet up with global best practice and consequently benefit from the inherent advantages. The statistics show that the ratio of female to male directors in the board is 7%. The statistics also show that some companies do not have any female

198

representation in its board. This is relatively not a welcome development as this result does not align with global best practice need for twenty-first century firms to take competitive advantage of a diverse workplace (Sila, Gonzalez, & Hagendorff, 2016) ensuring that men and women have the same opportunities and be given the same possibilities to take leadership positions. It is indicative of the fact that there is less awareness of the importance of female participation in the board among quoted firms in Nigeria. This situation is below the European Commission‘s proposed law to improve the gender balance in Europe‘s company boardrooms, aiming for at least 40% female representation (European Commission, 2012). Also in the US, there is also a US-wide campaign that asks firms to pledge 20%

female participation on board (Sila et al 2016). The maximum director shareholding (dhold) stood at 123.58 units, while its minimum holding lowered to 0 connoting that among the sampled companies and during the period of study some independent directors had no share of the companies they are directing.

However the statistics showed that on the average most of the independent directors had its company‘s share to the tone of 16.5units. The variable of Audit committee size (acsiz) indicated that 50% of the entire sampled companies had an audit committee size of 6 members with a least size of 4 members.

The variable of board remuneration (dcost) showed a large variance between its averages (2.70) and its highest board remuneration of 495.34. This may be factored into the reasoning that all the companies are not the same in terms of size, profitability, and a host of other factors. In accounting for the variable of audit credibility (audcred), the statistics revealed that about 60% of the sampled firms employed the big audit firms. Therefore, just about 40% did not employ the services of big four audit firm during the period under review.

Normality test was done with skewness/kurtosis statistic test as shown on table 4.5. The skewness/kurtosis statistic test determine if the data series were normally distributed by evaluating the disparity of the skewness as well as the kurtosis of the series compared with those from the normal distribution. It confirms the assumption that data disturbances were normally distributed. A series would be normally distributed if the probability of the statistic is less than 5% which is 0.05. However, if the data set is not normal, then these tests could have a high chance of false positives. The normality test on table 4.5 reveals that all the variables of interest are normally distributed and satisfies the test of significance at 1% level of significance except for the variables of firm size, which did not pass even at 10%. However, this situation may be overlooked since it is a control variable. Overall, the statistics revealed that there is no sample selection bias or outlier in the data that would impair the generalization from this study.

Correlation analysis on Table 4.6 above among other things showed that all the independent variable of interest showed a positive correlation with the variable of encosd except for the variable of socdon (-0.0019), invtemp (-0.0647), dhold (-0.0478), dcost (-0.0210) and the variable of tlbta (-0.0336). The

199

correlation result reveal that the variable of evrdo correlated positively with all variables of interest except for the variables of invtemp (-0.0075), dhold (-0.14900, dcost (-0.2750) and the control variable of tlbta (-0.0305). Again the independent variable of ensprod showed low association coefficient with socdon 0.0169), invtemp 0.1200) boind (0.0094), dhold, 0.2275), dcost (0.0296) and tlbta (-0.0395). Again negative correlation appeared with the independent variables of corporate governance.

The variable of encompo did not show strong association with any of the independent variables employed in the study. However, it showed negative correlation with independent variables of discgft (-0.0311), hrempr (-0.0462), invtemp (-0.1192), ehsdis, (-0.0527), boind (-0.0024), bogd (-0.1133), dhold (-0.0585), acsiz (-0.0585) and with the control variable of fage (-0.0392). From the correlation result table, we observed that the variable of encompo showed more negative correlation with corporate governance and social variables than any of environmental sustainability variables. A negative correlation appeared between the independent variables of engcon, and hrempr (0.0034), ehsdis

(-0.0084), dhold (-0.2837), dcost (-0.1365) and tlbta (-0.0208). Of note, this explanatory variable of engcon, did not show any negative correlation with environmental sustainability explanatory variables.

The result shows that three variables‘ of invtemp, boind and dhold showed a negative association with disocr, -0.1050, -0.0242, and -0.0570 respectively. Clearly, none of the variables showed a high positive association hence there will be no consequences of autocorrelation in the regression result. A shocking revelation from this statistics shows that the variable of audit committee size (acsiz) showed positive association with the variables of dcost (0.0392) audcred (0.1354) fsize (0.3949), fage (0.1028), tlbta (0.0481), ENVI (0.2543), SOCI (0.0331) and GOVI (0.4252). Finally, the correlation statistics revealed that none of the sustainability index score of ENVI, SOCI and GOVI showed a negative correlation with each other. While ENVI correlated with SOCI to the magnitude of 16%, ENVI associated with GOVI to the magnitude of 45% and SOCI correlated with GOVI only to the magnitude of 7 percent.

The heteroscedasticity and multicollinearilty tests for each of models 1 – 3 on tables: 4.8, 4.10, 4.12, 4.14, 4.16, 4.18, 4.20, and 4.22 respectively show that the Variance Inflation Factor (VIF) analyses are all less than the bench mark value of 10 which implies the absence of multicolinearity. Also the probability value of heteroscedasticity test are all greater than 5% which implies that the datasets are all free from the presence of unequal variance hence their regression result are interpreted as shown. The VIF test for model 4a and 4b are also less than the bench mark value of 10. However the probability value of heteroscedasticity test is less than 5% which implies that the data set is not free from the presence of unequal variance hence a robust regression was done to correct the heteroscedasticity problem. The robust regression was used to test hypothesis four.

4.4.2 Regression Results for Companies Specific Disclosures