GAINING INVESTORS’ CONFIDENCE THROUGH ENVIRONMENTAL INFORMATION DISCLOSURES IN ANNUAL REPORTS OF COMPANIES IN NIGERIA

Abstract

: The disclosure of information about the environment in which firms operate has been identified as an important aspect of corporate social responsibility. Stakeholders are motivated to respond to such disclosure by building confidence in such firms. Though there are many studies on environmental disclosure, this study adopted disclosure of environmental policies instead of environmental costs in order to investigate the relationship between environmental policies information disclosure and investors’ confidence. The main objective of the study was to ascertain whether the disclosure of information on environmental policies will engender the confidence of investors in the capital market. The independent variable of the study was the environmental policies disclosure which was proxied by environmental replenishment policy disclosure, waste management policy disclosure and carbon emission management policy disclosure. The dependent variable was the investor’s confidence which was measured by market capitalisation. The study adopted ex post facto research design as data were utilised from secondary sources. The population of the study was made up of six oil and gas firms and three cement companies listed on the floor of Nigerian Exchange Group. Content analysis was used to extract information from annual reports of the selected companies for the years 2016 to 2022. The data were analysed using descriptive statistics and multiple regressions. The results of analysis indicate that the environmental replenishment policy disclosure, waste management policy disclosure and carbon emission management policy disclosure exhibited significant positive relationship with the market capitalisation of the firms. The study therefore concludes that the disclosure of information on environmental policies enhances investor’s confidence on firms in the capital market. The study recommends amongst others that firm should not only formulate policies relating to environment but should disclose such policies as this will enhance the confidence of investors in the capital market.

Keywords: Investors’ confidence, Corporate reputation, Environmental policies disclosure, Market capitalisation.