Dynamic Relationship between Environmental Disclosure, Financial Report Quality and Financial Performance of Companies

The study is set to identify the dynamic relationship among environmental disclosure, financial report quality and financial performance of companies. The research employed the ex-post facto research design. The population of the study consist of all the 43 manufacturing companies on the Nigerian stock exchange. The study used secondary data which was extracted from the annual reports and account of the manufacturing companies for the years covered by the study. The multiple regression technique was used to analysed data. The results showed that Environmental Disclosure (EDI) plays a crucial role in influencing Financial Reporting Quality (FRQ), which in turn can have a positive effect on financial performance (ROA) of the companies. Based on the above findings, this study concludes that that Environmental Disclosure (EDI) largely operates on a self-deterministic basis, indicating that improvements in sustainability practices are primarily driven by internal corporate policies as well as Financial Reporting Quality (FRQ) positively influenced by environmental disclosure, indicating that firms committed to transparency in environmental practices tend to enhance their overall reporting quality. The study therefore recommended that companies should continue to focus on improving the quality of their financial reporting, as it directly impacts their profitability and market valuation. In addition, companies, especially those with strong financial performance, should allocate resources toward improving the quality and depth of their sustainability reporting.