The Moderating Effect of Foreign Ownership on the Relationship Between Sustainability Report and Corporate Performance in the Consumer Goods Companies in Nigeria

ABSTRACT

The study broadly examined the impact of sustainability reporting on the corporate firm performance of quoted consumer goods companies in Nigeria. To achieve that objective, the study specifically sought to ascertain the extent to which environmental sustainability reporting and social sustainability reporting affect both accounting and market-based performance proxies in the chosen sector in terms of return on assets (ROA) and earnings per share (EPS). In this study, ex-post facto research design was employed on the secondary panel data which was sourced from audited company annual financial reports of the sampled companies. The sample consisted of eighteen (18) out of the twenty-one (21) listed consumer goods companies on the Nigerian Exchange Group (NGX) for a 10-year period ranging from 2013-2022. The fixed panel regression method of analysis was adopted, as well as other diagnostic tests and preliminary analyses methods such as descriptive and correlation analysis. The results of the regression analysis showed that the effect of environmental sustainability reporting on both ROA and EPS are positive and negative, respectively, but both are not statistically significant. However, the impact of social sustainability reporting on ROA and EPS is negative and positive, respectively and are statistically significant. Furthermore, the outcome of the variable of foreign ownership showed that it substantially enhances both the accounting and market performance of firms and also strengthens (i.e., positively moderates) the positive relationship between the social aspect of sustainability and firm market performance. Overall, the outcome seems to be consistent with the legitimacy theory which suggested that corporate duties did not end at reaping profit but that commitment to environmental support programme and activities would harbour long-term value-adding benefits to all stakeholders. Therefore, it was recommended, among others, that policies that would sustain reporting on environmental issues should be encouraged since it had been shown to be beneficial to the health and survival of the firms. Furthermore, corporate managers should show genuineness in their motives and purposes while pursuing social sustainability objectives as it would minimize the risk of incurring losses.