Determinants of Voluntary Environmental Disclosure among Nigerian Firms: Applying the Cragg Double-Hurdle Model

Abstract

The study examines firm characteristics and voluntary environmental disclosures among oil and gas and industrial goods companies listed on the Nigerian Exchange Group (NGX). The inappropriate estimation technique often adopted in a content analysis studies motivates this study. The study adopts longitudinal research design, taking a census of thirty (30) companies of the entire oil and gas and industrial goods companies during the period 2014 to 2021, secondary data was sourced from the annual reports, while adopting the Cragg double hurdle model. The marginal effect (elasticities) of the explained variables of the double hurdle model shows the same exact direction of the coefficient with the second hurdle result where FS, ROA, and LEV have positive coefficients with p-values (0.0440, 0.0512, 0.0197; p=0.000, 0.306, 0.007) respectively while FA maintains its negative coefficient with p-value (-0.0006, p=0.274). FS, ROA and LEV being positively signed indicate conformity to both stakeholder and legitimacy theories, however with caution being exercised on ROA and FA. The study concludes that some firms attributes such as FS and LEV determines the decision and intensity of environmental disclosure while ROA and FA do not.

Keywords: Double hurdle, environmental disclosure, environmental sensitive firms, firm attributes