IMPACT OF ESG DISCLOSURES ON THE FINANCIAL REPORTING QUALITY OF LISTED MANUFACTURING COMPANIES IN NIGERIA

ABSTRACT

This study aimed to examine the impact of ESG disclosures on the financial reporting quality of listed manufacturing companies in Nigeria between 2017 and 2022. It was guided by the following objectives: to determine the relationship between ESG disclosures and financial reporting quality of manufacturing firms in Nigeria, to ascertain the impact of environmental disclosures on financial reporting quality of manufacturing firms in Nigeria, to investigate the impact of social disclosure on financial reporting quality of manufacturing firms in Nigeria, and to assess the impact of governance disclosure on financial reporting quality of manufacturing firms in Nigeria. The population consisted of all quoted manufacturing firms listed in the Nigerian exchange group, of which 16 manufacturing firms were selected to comprise the study’s sample. The sample was chosen using the purposive sampling technique. To analyze the impact of ESG disclosures on financial reporting quality of manufacturing firms in Nigeria, descriptive analysis, correlation analysis, and regression analysis were conducted. Our analysis reveals no significant relationship between environmental disclosure and firm financial reporting quality (FRQ). However, social disclosure shows a significant positive association with firm financial reporting. The analysis indicates a significant negative relationship between governance disclosures and firm financial reporting quality. Based on these findings, it is recommended that manufacturing firms should prioritize efforts to enhance the quality and depth of social disclosures. Additionally, they should reassess their governance disclosure strategies in light of the observed negative impact of governance disclosures on financial reporting quality.