Environmental Accounting Costs and Financial Performance of Oil and Gas Companies in Nigeria: Interplay of Resource-Based-View, Stakeholder and Legitimacy Theories

This study examines the impact of environmental accounting costs on the financial performance of listed oil and gas companies in Nigeria. High-risk industries like oil and gas face significant scrutiny with environmental sustainability now a global priority. In Nigeria, oil exploration in the Niger Delta has caused severe environmental damage, affecting the operational performance of oil companies. This research evaluates whether transparent reporting on environmental conservation and pollution remediation costs influences profitability and financial health. Grounded in Resource-Based View, Stakeholder, and Legitimacy Theories, the study explores how environmental costs can function as strategic assets, enhancing corporate reputation and stakeholder trust. Using a quantitative approach, the study analyzed data from ten (10) oil and gas firms listed on the Nigerian Exchange Limited (NGX) that spanned from 2013 to 2022 (10 years), yielding 400 observations. Data from annual reports were subjected to regression analysis, with robustness checks confirming the results' reliability. The findings show a positive relationship between environmental costs and financial performance, suggesting that companies that sign environmental agreements will be more profitable. This supports the view that companies seen as environmentally responsible attract investors and customers, gaining a competitive edge. The study concludes that environmental costs are not merely regulatory requirements but can be strategic tools for long-term financial success. It provides empirical evidence from a developing-country context, addressing a gap in the sector. Practically, the study encourages firms to incorporate environmental practices into their strategies. Socially, it underscores the role of corporate responsibility in promoting sustainable development. Limitations include its focus on a single industry and region; future research could explore cross-industry comparisons and broader geographical contexts.