Effect of environmental, social and governance disclosures on earnings quality of listed industrial goods companies in Nigeria
DOI:
https://doi.org/10.33003/fujafr-2026.v4i3.426.442-454Keywords:
Earnings Quality, ESG Disclosure, industrial goods, NigeriaAbstract
Purpose: This study examines the relationship between environmental, social, and governance disclosures and earnings quality among listed Industrial Goods Companies in Nigeria. The study was motivated by the increasing importance of sustainability reporting and the need to establish whether greater transparency in environmental, social, and governance activities is associated with improved earnings quality.
Methodology: The study employed an ex-post facto research design using panel data from 11 sampled firms over a ten-year period, resulting in 110 firm-year observations. Environmental Disclosure Index, Social Disclosure Index, and Governance Disclosure Index were used as explanatory variables, while earnings quality served as the dependent variable. Data were analysed using descriptive statistics,diagnostic tests, and fixed-effects panel regression with Driscoll–Kraay standard errors.
Results and conclusion: The findings reveal that environmental disclosure, social disclosure, and governance disclosure have positive and statistically significant relationships with earnings quality. The study therefore concludes that greater transparency across the environmental, social, and governance dimensions is associated with improved earnings quality. The findings further support Stakeholder Theory by indicating that comprehensive corporate disclosure can enhance transparency, accountability, stakeholder monitoring, and the credibility of reported earnings.
Implications of findings: The findings imply that firms can strengthen the credibility of their reported earnings by improving the quality and comprehensiveness of their environmental, social, and governance disclosures. Management should integrate ESG information into corporate reporting practices to enhance transparency and accountability, while regulatory authorities should strengthen ESG disclosure guidelines and monitoring mechanisms to promote consistency, comparability, and credibility in sustainability reporting.
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