Effect of Energy Efficiency Reporting on the Financial Performance of Nigerian Listed Firms

Purpose: This study examines the effect of energy efficiency reporting (EER) on the financial performance of listed firms on the Nigerian Exchange Group (NGX) over the period 2010–2024. Drawing on legitimacy theory, stakeholder theory, and the resource-based view, the study investigates whether voluntary and mandatory disclosures regarding energy consumption and efficiency practices translate into measurable gains in firm-level financial outcomes. Design/Methodology/Approach: The study employs a panel data methodology covering 148 NGX-listed firms across 15 years (2010–2024), yielding an unbalanced panel of up to 2,220 firm-year observations. Financial performance is measured using Return on Assets (ROA) and Tobin's Q (TQ). Energy Efficiency Reporting (EER) is the primary independent variable, operationalised through a composite disclosure index. Control variables include Firm Size (FS), Firm Profitability (FP), Growth Opportunities (GO), Firm Age (FA), and Liquidity (LIQ). The study employs the Random Effects (RE), Fixed Effects (FE), and System Generalised Method of Moments (SYS-GMM) estimators to address endogeneity and unobserved firm heterogeneity. Findings: The results reveal a positive and statistically significant relationship between energy efficiency reporting and both ROA and Tobin's Q. A one-standard-deviation increase in EER is associated with a 1.8 percentage point increase in ROA and a 0.23 increase in Tobin's Q, suggesting that firms that report more transparently on energy efficiency achieve superior accounting-based and market-based performance. These effects are robust across alternative model specifications and after controlling for endogeneity via SYS-GMM estimation. Research Limitations/Implications: The study relies on annual report disclosures, which may be subject to managerial impression management. Furthermore, the NGX context limits direct generalisability to other markets, though the findings offer transferable insights for sub-Saharan Africa. Practical Implications: The findings suggest that firms can leverage energy efficiency reporting as a strategic tool for enhancing investor confidence and financial returns. Policymakers should consider mandating structured energy efficiency disclosures within the existing corporate governance framework. Originality/Value: This study is among the first to rigorously examine the longitudinal financial effects of energy efficiency reporting, specifically within the Nigerian listed-firm context, employing a dynamic panel framework over a 15-year horizon.