Corporate Governance and Sustainability Reporting in Nigeria

Abstract

ABSTRACT:Sustainability reporting enhances the quality of financial reporting by meeting the needs of diverse users of corporate information. Traditional financial reporting is deficient in total reporting and this underscores the need for sustainability reporting. Most studies have focused on the impact of corporate governance on financial performance of listed firms. This study explored the effect of corporate governance dimensions on sustainability reporting. The study adopted ex-post facto research design. The population of the study comprised 169 quoted companies on the Nigerian Stock Exchange (NSE) as at December 31, 2019. A sample of 42 quoted companies that had complete and relevant data for the period of study (2010-2019) was selected through stratified and purposive sampling techniques. Data were extracted from published audited annual reports of firms and Global Reporting Initiative (GRI-4) performance indicators. Data were analyzed using descriptive and inferential statistic (multiple regression). The hypotheses were tested at 0.05 significance level. The findings revealed that corporate governance (CG) had positive and significant relationship with sustainability reporting of selected quoted companies in Nigeria (Adj.R2 = 0.316, Wald-Stat = 333.68, p < 0.05). Furthermore, evidence reveals that board size, board independence, female director and board ownership have significant effect on SR (BS= 0.349, t-test= 3.283, p < 0.05, BI= 0.336, t-test= 2.087, p < 0.05, FD= 1.208, t-test= 12.411, p < 0.05, BO= 0.004, t-test= 7.837, p < 0.05). However, CEO duality do not have significant effect on SR (CD = 0.113, t-test= 1.668, p > 0.05). This implies that, BS, BI, FD and BO are significant factors influencing changes in SR. However, CD does not significantly influence changes in SR. The study concluded that CG affects SR. The study recommends that shareholders at their annual general meeting should establish a large and gender diverse board, with a greater proportion of qualified and experienced independent directors, with separation of roles of chairman from that of CEO and greater directors share ownership as this will enhance sustainability reporting in all its dimensions. Specifically, shareholders should include greater proportion of female and independent directors on board as they have higher tendency of promoting sustainability reporting.