Page 1 of 28

Journal for Studies in Management and Planning

Available at

http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 04 Issue 06

June 2018

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 223

Effect of Sustainability Cost Accounting on Financial

Performance of Telecommunication Firms in Nigeria

Francis N. Udeh & Raymond A. Ezejio

Department of accountancy Nnamdi Azikiwe University, Awka

Mail:fn.udeh@unizik.edu.ng and thaddray4life@yahoo.com

Abstract

This study is to determine the effect of sustainability cost accounting on financial performance of

Nigerian telecommunication firms. Ex post fact research design and time series data were

adopted. Formulated hypotheses were tested using regression analysis with the aid of SPSS

Version 20.0. Based on this, the study found that Sustainability cost accounting has significantly

affected return on assets of Nigerian telecommunication firms. Another finding is that

sustainability cost accounting has significantly affected return on equity of Nigerian

telecommunication firms. Based on the findings, the researchers recommended among others

that it is necessary that environmental evaluation is carried out periodically (say every two

years) by technical staff charged (and with skills) with environmental management. The skills

can also be conveyed skillfully to stakeholders to constantly get involved in the environmental

evaluation of the companies activities.

Key words: sustainability reporting, financial performance and Nigerian telecommunications

INTRODUCTION

The concept of sustainability reporting

views as important both the traditional

concern of business organizations strategies

for profit maximization, diversification,

product differentiation as well as globally

assessing a firm’s performance on its

environment. However, the evolution of

strategic thinking underscores the need to

include activities that seek to integrate social

and environmental issues into business

decision making process, more so as firms

that properly integrates their environment

and people are viewed as socially

responsible (Nnamani, Onyekwelu, &Ugwu,

2017).

It believed that in today’s dynamic and

complex business environment, the

corporate sustainability is likely to influence

corporate profitability and overall

performance. It lays a foundation for

preserving and enhancing value of firm. The

firms reap plenty of strategic benefits as a

result of embedding sustainability in their

core strategies (Priyanka, 2014).

The programmes and policies of government

can play a vital role in encouraging and

motivating businesses to adopt EMA

Page 2 of 28

Journal for Studies in Management and Planning

Available at

http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 04 Issue 06

June 2018

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 224

systems as an integral part of a firm’s

management accounting practices, such that

all project costs (including social and

environmental costs) become clearly

articulated, fully inventoried and properly

allocated over the life on an investment

(UNDESA; 2001). In addition, Betianu

(2005) conceptualized an environmental

management accounting system as a

management accounting system that has

been refined so as to enable users of the

system to be provided with information that

reflects the environmental performance of

the organization.

Sustainability often regarded as the

integration of three performance areas:

economic, social and environmental; is

viewed as a necessary practice for the

survival of modern business firms. Ballon,

Heitger, and Landes,(2009) submits that

organizations have over the time realized

that meeting stakeholders’ expectations is a

necessary condition for sustainability and

therefore needed to achieve overall strategic

business objective. The challenges presented

to modern day managers on how to manage

performance across the dimensions of

sustainability in order to derive the

synergistic benefits from its implementation

strategy. Elkington (1998) argues that the

key to managing organizational progress

towards sustainability is in the measurement

of what cannot be measured, you are likely

to find hard to manage.

Corporate Sustainability and its impact on

financial performance have emerged as

important areas for research in recent years

(Priyanka, 2014). Various studies have been

performed over the last decade for

examining this relationship. However, the

results have been mixed and inconclusive.

Moreover, most of the previous studies have

been conducted in the context of developed

countries (like US, Europe, UK, Australia,

etc.).

There are a lot of researches about the

environment disclosure (Nilandri,

Pattanayak & Mitali, 2008). Nowadays, the

demand for company to apply environment

disclosure is very high in order to save the

world and it is proved that company with

environment disclosure can achieve good

performance. There are many effects to the

financial performance with the existence of

environmental disclosure. Along with

economic growth, pressure on natural

systems and earth resources intensifies.

Business unit managers seek to reduce

operating costs and environmental impacts

resulting from operational activities (Azar,

Page 3 of 28

Journal for Studies in Management and Planning

Available at

http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 04 Issue 06

June 2018

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 225

Shahbazi, Abad & Mousavi, 2014). Most of

researchers have explored how the

stringency of the environmental policy

regime affects a company’s EMA

applicability and financial performance.

Most of the studies who examined the

relationship between environmental

management and firm performance, some

found negative relationship Cortez and

Cudia (2011); McWilliams and Siegel

(2006); Kasum and Osemene (2010) while

many found positive relationship (Nakao,

Amano, Matsumura, Genba, & Nakano,

2007); Clause and Rikhardsson, (2008)

Ding (2009); Beredugo and Mefor (2012);

Moorthy and Yacob, (2013); Sayedeh and

Saudah (2014). Okoye and Ezejiofor (2013),

discovered that sustainable environmental

accounting has significant impact on

corporate productivity in order to enhance

corporate growth. The findings of these

studies were uncertain, besides few research

of this nature focused on those costs

incurred by these entities in maintaining

their environment where they operate in

order to ascertain whether this affect

corporate profitability, sustainability,

integrity and reputation. This issue becomes

critical and calls for further investigation to

determine the extent green accounting

reporting has affect the financial

performance of Nigerian corporate

organizations. Wibowo (2012), show that

there is positive impact of the social

performance to the profitability of the firms

and also there is positive impact of the

profitability of the company to the social

performance of the firms. sayedeh, and

saudah (2014), experimental findings are

quite controversial, Moreover, previous

research has not explored how the

stringency of the environmental policy

regime affects a company’s EMA

applicability and financial performance and

there is no universal agreement about the

actual impact of EMA on firm performance.

All of the above highlights the necessity of

development of the environment accounting

in our country; however there is limited

study on networking establishment

(Telecommunication firms) in Nigeria since

this establishment is one of the sectors that

have been contributing to the society.

Against the backdrop, there is need to

established the extent environmental cost

accounting has impacted on the financial

performance of Telecommunication firms in

Nigeria.

The main objective of this study is to

determine the effect of environmental cost

accounting on financial performance of