ENVIRONMENTAL COST INFLUENCE AND PERFORMANCE OF LISTED OIL AND GAS COMPANIES IN NIGERIA

Abstract

The study examined the effect of environmental cost on performance of listed oil and gas companies in Nigeria. Performance of companies was measured in terms of operational performance, financial performance, and market performance which were proxied by asset utilization, net profit, and share price of the companies. Ex post facto research design was adopted while secondary data were collected from the annual reports of six (6) oil and gas companies which were judgmentally sampled from the population of 10 listed oil and gas companies on the Nigerian Exchange Group. The study adopted the multiple panel regression in analyzing the data. The findings revealed that environmental cost has no significant effect on asset utilization, net profit, and share price of the listed oil and gas companies on the Nigerian Exchange Group. Thus, it is recommended that, the management of the companies should reduce the activities that have effect on the environment in order to reduce the cost of maintenance of the environment while increasing assets that will enable high productivity but reduce negative environmental impacts. Furthermore, oil and gas companies should use more environmental efficient ways of oil exploration and oil and gas production so as to mitigate the negative impacts the cost of such exploration and production methods have on their profit and the environment. Lastly, the study recommended that, companies should adopt globally recommended best production practices that are environmentally responsive and these methods should be reported. As such, they might attract investment and patronage of their shares from investors that have environmental concerns in the heart of their investment drive.