Green accounting practices and firm value : evidence from selected listed companies on the Nigerian Exchange Group (NGX)

Abstract

This study investigates the relationship between the green accounting practices and the firm value of companies listed on the Nigerian Exchange Group (NGX), holding constant firm-specific characteristics such as firm size, leverage, profitability, and firm age. The study uses panel data from 2020 to 2024, resulting in 100 years of data, which are sourced from Refinitiv, annual reports, sustainability reports, African financials, and the NGX database. The Green Accounting Index (GAI) derived from the Global Reporting Initiative (GRI) framework is applied to measure green accounting practices, while the natural log of firm value is used as a measure of firm value. The study builds a body of knowledge by synthesizing the concepts of green accounting practices, firm-specific financial characteristics, and sector differences in one framework, specifically in Nigeria, where reporting of sustainability is still not mandatory and has not been studied extensively. The results show a positive value on green accounting, but a low impact on firm value. Leverage, profitability, and firm age, however, have strong positive relationships with firm value, whereas firm size has a negative relationship. The results reveal that although sustainability issues are gaining importance, the traditional financial indicators are still more significant in explaining the firm value in developing countries like Nigeria. The study also underscores the need to have credible environmental reporting and institutional support to enhance the value relevance of environmental practices. The results are important for policy implications for companies, investors, and government leaders interested in supporting sustainable business models and sustainable value generation in emerging markets.