Environmental Accounting Practices and Investment Decisions. Decision of Quoted Food and Beverage Companies in Nigeria

Table of Contents

LIST OF FIGURES

LIST OF TABLES

CHAPTER ONE: INTRODUCTION
1.1. Background to the Study
1.2. Statement of the Problem
1.3. Objective of the Study
1.4. Research Questions
1.5. Research Hypotheses
1.6 Justification for the Study
1.7 Significance of the Study
1.8 Scope of the study
1.9. Limitations of the Study
1.10 Operationalization of Variables
1.10.1 Mathematical Model
1.11 Operational Definition of Terms

CHAPTER TWO: REVIEW OF LITERATURE
2.1 Conceptual Review
2.1.1. Environmental Accounting
2.1.2 Environmental Accounting Practices in Nigeria
2.1.3 Environmental Acts and Regulations in Nigeria
2.1.4 Investment Decision
2.1.5 Measurement of Investment Decision
2.1.6 Measurement of Environmental Accounting Practices
2.2 Theoretical Review
2.2.1 Stakeholders Theory
2.2.2 Political Economy Theory
2.2.3 Legitimacy Theory
2.2.4 Signaling Theory
2.2.5 Theoretical Framework
2.3 Empirical Review
2.3.1 Environmental Accounting Practices and Market price per share
2.3.2 The controlling effect of firm size on the relationship between environmental accounting practices and market price per share
2.3.3 Environmental Accounting Practices and Volume of shares traded
2.3.4 The controlling effect of firm size on the relationship between environmental accounting practices and volume of shares traded
2.3.5 Environmental Accounting Practices and Market capitalization
2.3.6 The controlling effect of firm size on the relationship between environmental accounting practices and market capitalization
2.4 Tabular summary of Empirical Findings
2.5 Gap in Literature
2.6 Researcher’s Conceptual Framework

CHAPTER THREE: METHODOLOGY
3.1 Research design
3.3 Sample size and Sampling technique
3.4 Restatement of hypotheses
3.5 Methods of data collection
3.6 Instrument for Data Collection
3.7 Validity and Reliability test
3.8 Administration of Research Instrument
3.9 Method of Data Analysis
3.10 Model Specification and Measurement of Variables
3.11 Model Evaluation
3.12 A priori Expectation/Expected Result
3.13 Ethical Consideration

CHAPTER FOUR: DATA ANALYSES, RESULTS AND DISCUSSION OF FINDINGS
4.1 Descriptive Statistics
4.2 Testing of Hypotheses
4.2.1 Test of Hypothesis One (Ho1)
4.2.2: Test of Hypothesis Two (Ho2)
4.2.3: Test of Hypothesis Three (Ho3)
4.2.4: Test of Hypothesis Four (Ho4)
4.2.5 Testing of Hypothesis Five (H05)
4.2.6 Testing of Hypothesis Six
4.3 Discussion of Findings
4.4 Implications of Findings

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of the whole study
5.2. Summary of Findings
5.2.2 Theoretical Findings
5.2.3. Empirical Findings
5.3 Conclusion
5.4 Recommendations
5.5 Contribution to Knowledge
5.6 Suggestions for further studies

REFERENCES

APPENDIX A

APPENDIX B

APPENDIX C

APPENDIX D

APPENDIX E

APPENDIX F

APPENDIX G

APPENDIX H

ABSTRACT

Investment decisions is as old as man and is now veiled in the mystery of antiquity. The choice is born out of a desire to make way for the future or to plan for rainy days. Under traditional financial theory, investors are called cautious wealth maximizers, adopting basic financial rules and basing their investment decisions solely on risk-return considerations. Studies have shown that Investment decisions need to undergo a thorough analysis of the prevailing circumstances on the basis of a number of variables, but regardless of the varied information available that describes justification and irrationality, investors are keen to avoid the confusion associated with the final decisions they are making. Studies further revealed that factors are not necessary to influence investment decisions. The study examined the effect of environmental accounting practices on investment decision of quoted food and beverages companies in Nigeria.

The study employed the ex post facto research design. The population consisted of 23 Quoted Food and Beverage companies in Nigeria as at 31st December, 2018 according to Nigeria Stock Exchange (NSE). The sample size consisted of 10 food and beverages companies in Nigeria. It employed the convenience sampling technique in selection of the sampled companies under investigation. Data from the research were obtained from financial statements and annual reports of the sampled companies. Validity and Reliability were premised on statutory audit of the financial statements. Data were analyzed through Descriptive and Inferential statistics.

The findings revealed that environmental accounting practices significantly affects market price per share of listed food and beverage companies in Nigeria (Adj.R2= 0.417320, F(6)= 24.63488, p<0.05); there is a controlling effect of firm size on the relationship between environmental accounting practices and market price per share of quoted food and beverages companies in Nigeria (Adj.R2= 0.415349, F(6)= 18.58293, p<0.05); environmental accounting practices have a significant effect on volume of shares traded of quoted food and beverages companies in Nigeria (Adj.R2= 0.126640, F(6)= 5.785116, p<0.05), there is a controlling effect of firm size on the relationship between environmental accounting practices and volume of shares traded of quoted food and beverages companies in Nigeria (Adj.R2= 0.256962, F(6)= 9.559192, p<0.05); environmental accounting practices have a significant effect on market capitalization of quoted food and beverages companies in Nigeria (Adj.R2= 0.253335, F(6)= 12.19655, p<0.05) and there is a controlling effect of firm size on the relationship between environmental accounting practices and market capitalization of quoted food and beverages companies in Nigeria (Adj.R2= 0.303710, F(6)= 11.79552, p<0.05).

The study concluded that environmental accounting practices have effect on investment decision of listed food and beverage companies in Nigeria. The study recommended that regulators should ensure that voluntary and mandatory disclosure on environmental accounting be stated. They should ensure compliance with various standards that are laid down to improve environmental accounting practices.

Word Count: 461

Keywords: Environmental accounting practices, Environmental protection disclosure, Firm size, Investment decision, Market capitalization and Waste management disclosure.

LIST OF FIGURES

Figure 2.6.1 Researchers Conceptual Model

LIST OF TABLES

Table 3.1 NSE Fact book

Table 3.2 Environmental Accounting Practices (EAP) Checklist

Table 3.3 Definitions of Proxies to be used for Model Testing

Table 4.1 Descriptive statistics

Table 4.2 Regression Analysis for Model One

Table 4.3 Regression Analysis for Model Two

Table 4.4 Regression Analysis for Model Three

Table 4.5 Regression Analysis for Model Four

Table 4.6 Regression Analysis for Model Five

Table 4.7 Regression Analysis for Model Six

Table 4.8 Summary of Hypothesis Testing

CHAPTER ONE: INTRODUCTION

1.1. Background to the Study

Investment decision is as ancient as man and it is now shrouded in antiquity mystery. The decision is made out of the desire to make future provisions for unfavorable times. The need to uncertainty reduction associated with future outcomes of present actions made investment decision impeccable. However, the future outcomes certainty had always been elusive consequent upon changes in seasons and environmental factors which underline the risk concept (Oladapo, 2015). The key sectors of developed economies deregulation e.g. USA and Europe and volatility in financial markets recent in developing economies like Africa (Nigeria), managing investments and capital projects decision rules are been said to be on discretion over uncertainty (Okafor, 2018).

Investment decisions are taken by investors and investment managers who use fundamental analysis, technical analysis and judgment use to conduct investment analysis. Investment decisions are also backed up by decision-making instruments in which knowledge structure and market conditions systematically affect investment decisions of individuals as well as market outcomes (Ambrose & Vincent, 2014). Market behavior for investors stems from psychological decision-making criteria that understand why people purchase or sell stocks (Sani, 2018). Thair, (2017) reported that the conduct of individual investments is said to be with buying stock choices. No matter how well educated an investor is, he has done his study, he still behaves looking at the loss fear in the future (Otu, Okon & Okafor, 2018).

In addition to accounting details, investment decisions are commonly assumed to be a function of many variables, such as market conditions and individual risk profiles. Irrespective of accounting details, the disposal error is seen, investors are affected by historical cost expectations and asymmetrical risk preferences for benefit or loss circumstances. Mayangsari's research findings (2018), which analyzed factors that affect investor behavior, indicated that classical criteria for maximizing wealth are important to investors, while investors use different criteria when buying stocks. Contemporary concerns like local or international activities, the environmental track record and the firm’s ethical posture appear to be given only cursory consideration. The recommendations of brokerage houses, individual stock brokers, family members and coworkers go largely unheeded. Many individual investors discount the benefits of valuation models when evaluating stocks (Cortez & Cudia, 2011).

Given the unfavorable nature of the market and investment environment in Nigeria and the overview of the economy as a whole, it can be seen that firms pay adequate attention to the uncertainty of the global economic climate before making any investment decisions because failure to do so might trigger problems (Saman, 2019). The recent crisis in the Eurozone has significantly affected global economy output, resulting in a fall in demand for commodities in both developed and emerging markets. In addition to bringing down global prices and inflation, the crisis has also slowed domestic expansion. The crisis has also triggered global economic instability, currency tightening, poor output in the non-oil sector and a global decline in crude oil prices (Ekanem, Nwachukwu & Etuk, 2014).

Environmental issues have become a worldwide issue which cuts across all countries and companies. Usually environmental issues result in negative effects for the natural world as a result of the harmful activities of the corporations which in the long run creates problems that also affect the community (Oraka & Egbunike, 2016). Companies are now becoming more reactive and more mindful of their positions and obligations towards society and the environment, leading to an increasing increase in social and environmental reporting (Adediran & Alade, 2013). The knowledge of the world and the capacity of man to inflict harm started in the 19th century in the 50's. That concern was expressed repeatedly in different international summits and consensus from the sixties. Recently, there has been a greater engagement between firms and the environmental consciousness under which they work, this knowledge has been sharpened by concerns about resource conservation, resource scarcity, environmental degradation and firm’s operations that lead to ozone layer reduction and thus creates an imbalance in the environment system (Ahmad, Waseer, Hussain & Ammara, 2018).

Due to the mono-nature of the Nigerian economy, the complete elimination of fuel subsidies at the beginning of January 2012 in combination with the prohibitive fiscal policy on certain goods contributed to a higher inflation rate in the medium term and expected decline in investment returns. Loan rates have been edging up over the last one year on the basis of contractionary monetary policy. The private sector has tended to bear high capital costs and public sector consequences in the crowding of the bond market. Such major economic problems have disastrous effects on Nigeria's market climate, making it harder to forecast accurately the outcomes of investment and capital projects (Osamene, 2010).

Williams (2015) expressed a lack of transparency on economic policies or use of unreliable calculation for reporting as a result of low accountability indication. Accountability alone does not consistently respond to the steady practice of environmental accounting as reported by Mohd, Sulaiman and Ahmad (2014), which revealed that qualitative and quantitative environmental knowledge does not influence investor decision-making and gives the impression that environmental accounting practices have not yet been introduced, while, Williams (2015) looked at the accountant viewpoint from New South Wales, Queensland, Tasmania and Victoria (Australia) and found that accountants are still overlooked to be included in the accounting activities of the business.

The United Kingdom (UK) has updated the Companies Act (2006) which requires corporations to report social matters (Theron, 2008). Likewise, the annual reports allow the largest businesses in Denmark to disclose climate and human rights (KPMG, 2016). It is also not a shock that governments and stock markets in developed countries should allow legislation to enhance transparency in the social and environmental spheres. In Indonesia, listed and publicly owned companies are expected to carry out a review of corporate social responsibility (Roca & Searcy, 2012). In India, the Stock Exchange Board (SEB) and the Company Act (AC) also require companies to report on corporate responsibility (KPMG, 2016). Similarly, the Johannesburg Stock Exchange (JSE) made it compulsory for businesses to address the world they work in (Ioannuou & Serafeim, 2014). Thus, mandatory standards for corporate social disclosure are set by both developed and developing countries. Nigeria is a developing country and in its Corporate Governance Code (CCG) issued in 2011, the Nigerian Securities and Exchange Commission (NSEC) has recently required such social and environmental disclosures (Nigerian Stock Exchange, 2011).

In response to public demands for more socially conscious accounting, business companies have turned to voluntary social and environmental disclosure practices, which has been seen as growing in recent years (KPMG, 2017). Nevertheless, substantial improvements in worldwide coverage on financial, environmental and governance (SEG) by surveyed N100 and G2601 in 2017 are due to policy and stock market reforms (KPMG, 2017). Similarly, legislation may be the only catalyst to move the current stabilizing rise in social reporting practices (KPMG, 2017). So, while corporate social disclosure is considered voluntary (Alkababji, 2014), Compulsory criteria could have driven the practice to present rates and may also have a significant effect on future pushing activities (KPMG, 2017). Therefore, following documented advancements in the discipline in developing countries, legislation in those countries are not being followed. The Financial Service Reforms Act (FSRA) 2010 mandated Australia to issue social disclosures (Doucin, 2013). In France, too, the Grenelle Act of 2009 provided for compulsory social and environmental disclosure (Mahmud & Islam, 2015).

Nigeria's legislative structure for sustainable businesses comprises the provisions of the Companies and Allied Matters Act (CAMA), (2004), the Federal Ministry of Environment, the Environmental Impact Assessment Act and, lastly, the Code of Corporate Governance for listed companies. Up until 1968, the law binding on the Nigerian companies had no provision for any kind of compulsory disclosure of information. CAMA 2004 as amended is the new company Act in service. The Act provides for compulsory corporate governance for companies. (Commission on the Corporate Relations, 2004). As stated earlier, the Federal Ministry of the Environment has also replaced all other state and federal environmental agencies (Dibia & Onwuchekwa, 2015). The ministry's responsibility was to prepare a nation-wide comprehensive strategy for conserving natural resources and protecting the environment. Furthermore, the Ministry was to establish a plan which would lead to the continuous upgrade of environmental science and technical networks and also include an estimation of the financial consequences of the plan (Ajibolade & Uwuigbe, 2013).

In addition, there is the Environmental Impact Assessment Act (1992), which was a law introduced after the United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro, Brazil, from 3 to 14 June 1992. The Act is planned for any constraints on construction projects that can lead to damage to the environment before the project begins. The proposals are reviewed on the basis of various criteria, as to how they will affect the public. The Federal Ministry of the Environment sets the criteria that must be met on the project that passes the evaluation and then grants the approval (Osazuwa, Ahmad & Adam, 2016).

Akinlo and Iredele, (2014) thought that if properly educated, capital markets might provide the necessary financial and reputational incentives for pollution management to respond to firm environmental performance information. Perhaps more resources should be used to provide company-specific environmental performance information to allow informed decision-making for all stakeholders (Akinlo & Iredele, 2014). Stock markets will respond negatively to reports of adverse environmental incidents (such as spills or infringements of permits), as well as to an announcement that companies are using cleaner technologies. Capital markets respond favorably (market value rises for firms) to explicitly acknowledge the declaration of incentives and superior environmental results (Charles, John & Umeoduagu, 2017). Investors respond negatively to people's concerns (the valuation of firms is declining). The effect of company-specific environmental news on market value can operate across several channels: a high level of pollution severity can show the inefficiency of the company's manufacturing process to investors; it can call for tighter regulation by environmental groups; it can lead to loss of credibility, goodwill, etc. (Karambu & Joseph, 2016). By contrast, reporting high environmental efficiency or investing in sustainable technology may have the opposite effect: less scrutiny by regulators and societies (including the financial community), greater access to foreign markets (Oyedokun, Elvis & Abiola, 2019).

In view of the above, this research was designed to evaluate the effect of environmental accounting practices on investment decision of quoted food and beverages companies in Nigeria.

1.2. Statement of the Problem

In non-modern financial theory, investors are seen as rational wealth maximizers, following simple financial rules and putting their investment strategies solely on a risk-return basis as factors that could be used to influence investment decisions (Zhang & Fu, 2019). Traditional economic theory assumes that people are responsible actors who make choices critically in order to take advantage of the incentives available to them and, when it comes to investment, their emotional inclinations, implicit patterns of behavior and psychological bias, how they perceive the world and how they make decisions. The controversy surrounding this field of study was the various results the researchers had come up with. For example, Hua, Yuan, and Zhang (2019) argued that dividends, projected returns, and financial stability of the company are crucial investor considerations.

Sekerz, (2017) said there are six factors that influence the attitudes of individual investors towards their investment decisions: dividends, rapid growth, savings investment, quick income through trading, competent investment management and long-term growth. Michaela, Roman and Eva (2019) consider individuals to base their stock buying decisions on; price index volatility, recent market change in stock of a company, current economic indicators. Investment decisions need to undergo a thorough examination of the prevailing circumstances based on a variety of factors, but, regardless of the varied information available which explains rationality and irrationality, investors are keen to avoid risks associated with the ultimate decisions they take. The factors are not sufficient to influence investment decisions, meaning that other considerations, such as environmental accounting standards, may also impact investment decisions in both developed and developing countries.

The use of natural resources is linked to economic growth and not free of environmental effects as traceable to Nigeria's environmental degradation and experience of air pollution. Based on this, the need for most important natural resources continuous use in recent days to satisfy consumers would undermine the capacity of future generations to fulfill their own needs (Beredugo & Mefor, 2013). In the developing countries and Nigeria in particular, previous work has shown that disclosure of environmental accounting is voluntary due to the non-availability of local or international disclosure guidance standards (Oyedokun, Elvis & Abiola, 2019).

Dike and Micah (2018) reported that the magnitude of environmental pollution in Nigeria today is much greater than in recent decades as a result of the increase in population growth and urbanization, the modernisation of agriculture, in particular the use of increasing agrochemicals, the introduction of new technologies and consumer goods, and the inefficiency of administrative, logistical and political structures. Therefore, pollution-related environmental degradation must be addressed head-on if Nigeria is prepared to achieve the goal of being one of the twenty leading economies in 2020, a stable environment for economic growth and sustainability. This ultimately call for a comprehensive and holistic approach to managing environmental protection in the region.

It cannot be ignored the connection between environmental accounting practices and market price per share. According to Hassan and Hakan, (2012) nowadays, businesses are creating a lot of environmental problems when they conduct their activities because of income maximization and retail price rises. The magnitude of environmental problems as a global phenomenon has negative effects on our quality of life and investor decision. It cannot ignore the influence between environmental accounting practices and the number of traded shares. The companies’ response to environmental liabilities has led to the reconfiguration of corporate performance indices in a broader context, under the subtle influence of environmental and social pressures, by developing a holistic image of a number of traded shares (Yahaja, 2019). This has contributed to an increasing demand from different stakeholders for environmental policies of the business and subsequent assessment of this information through public disclosure. As a result, a new field of environmental accounting has emerged (Iqbal, Sutrinso, Assih & Rosidi, 2013). Environmental accounting issues emerged from the reality that, as a result of the needs of various stakeholders such as government, investors, lenders, the general public, customers, etc., financial data on environmental performance of various organizations is reported in the financial statements (Charles, John & Umeodu, 2019). The absence of accurate and verifiable information on corporations' environmental practices could therefore lead to a trend in which corporations can pollute the environment and yet appear cheaper than the others which incur environmental protection costs (Onyali, Okafor & Egolum, 2014).

One cannot overemphasize the relationship between environmental accounting practices and market capitalization. Knowledge is one way of having support and maintaining stakeholder relationships (Islam, 2015). Meanwhile, from the viewpoint of stakeholders, they have the right to receive more accurate information on the value of decision-making and knowledge needs to be revealed by firms (Iqbal, Sutrinso, Assih & Rosidi, 2013). Investors are most commonly concerned with market-based success metrics and their market capitalization (Onyali, Okafor & Egolum, 2014). Management will provide and reveal adequate environmental information to reduce the distance between the agencies and increase the market share of companies (Musa, Teru & Musa, 2015). Data can also remove asymmetry data, especially if it is presented as media disclosure in a form that is easily accessible and wide range (Ahmad, 2012). However, disclosure of environmental information in annual reports is commonly used by companies as it remains effective in reporting to various stakeholders as the key source of information (Sarah, Zaleha & Ku, 2017). More transparency will lead to more advantages for enhancing its credibility. Many companies present environmental details in company statement and purpose or a statement about what companies do and want (Osemene, Kolawole & Oyelakun, 2016). The statement reflects the intention of creating a positive picture for the company.

Consequently, this study examined the effect of environmental accounting practices on investment decision of quoted food and beverages companies in Nigeria.

1.3. Objective of the Study

The main objective of this study was to examine the effect of environmental accounting practices on investment decision of quoted food and beverages companies in Nigeria. The specific objectives were to;

I. Ascertain the effect of environmental accounting practices on market price per share of quoted food and beverages companies in Nigeria.
II. Examine the controlling effect of firm size on the effect of environmental accounting practices on market price per share of quoted food and beverages companies in Nigeria.
III. Determine the effect of environmental accounting practices on volume of shares traded of quoted food and beverages companies in Nigeria.
IV. Identify the controlling effect of firm size on the effect of environmental accounting practices on volume of shares traded of quoted food and beverages companies in Nigeria.
V. Evaluate the impact of environmental accounting practices on market capitalization of quoted food and beverages companies in Nigeria.
VI. Investigate the controlling effect of firm size on the impact of environmental accounting practices on market capitalization of quoted food and beverages companies in Nigeria.

1.4. Research Questions

The main research question was to determine the effect of environmental accounting practices on investment decision of quoted food and beverages companies in Nigeria.

The other research questions formulated were:

I. What is the significant effect of environmental accounting practices on market price per share of quoted food and beverages companies in Nigeria?
II. What is the controlling effect of firm size on the effect of environmental accounting practices on market price per share of quoted food and beverages companies in Nigeria?
III. How does environmental accounting practices affect volume of shares traded of quoted food and beverages companies in Nigeria?
IV. What is the controlling effect of firm size on the effect of environmental accounting practices on volume of shares traded of quoted food and beverages companies in Nigeria?
V. What impact does environmental accounting practices have on market capitalization of quoted food and beverages companies in Nigeria?
VI. What is the controlling effect of firm size on the impact of environmental accounting practices on market capitalization of quoted food and beverages companies in Nigeria?

1.5. Research Hypotheses

The following hypotheses were tested in line with the above specific objectives and the research questions. The tests will enable answers to be provided to the above questions.

Hypothesis 1

H0: Environmental accounting practices do not have significant effect on market price per share of quoted food and beverages companies in Nigeria .

Hypothesis 2

H0: There is no controlling effect of firm size on the relationship between environmental accounting practices and market price per share of quoted food and beverages companies in Nigeria.

Hypothesis 3

H0: There is no significant effect of environmental accounting practices on volume of shares traded of quoted food and beverages companies in Nigeria .

Hypothesis 4

H0: There is no controlling effect of firm size on the relationship between environmental accounting practices and volume of shares traded of quoted food and beverages companies in Nigeria.

Hypothesis 5

H0: There is no significant effect of environmental accounting practices on market capitalization of quoted food and beverages companies in Nigeria .

Hypothesis 6

H0: There is no controlling effect of firm size on the relationship between environmental accounting practices and market capitalization of quoted food and beverages companies in Nigeria.

1.6 Justification for the Study

Yahaya, (2018) stated that poverty and population pressure are some of the reasons for the reduction of natural resources which lead to serious environmental problems. Nevertheless, Nigeria's poverty level is increased not only by population growth, but also by corruption in high positions. A vast number of Nigerians suffer from insufficient access to the low living standards required to live a relatively decent life. Concerns over limited comfort have contributed to concern for sustainable growth worldwide, as well as for businesses becoming environmentally conscious. It thus became a requirement for evaluating and calculating environmental effects and sustainable growth on firms' investments. These goals should enable accounting information users in making decisions that are economically sound.

Empirical works and theories available show the relationship between environmental accounting practices and financial performance, firm value and profitability. Studies like Osemene, Kolawole and Oyelakun (2016); Sarah, Zaleha and Ku, (2017); Charles, John and Umeoduagu (2017); Oyedokun, Elvis and Abiola, (2019); Sani, (2018); Musa, Teru and Bukar, (2015); Osazuwa, Ahmad and Adam, (2016), Akinlo and Iredele (2014), Rakiv, Islam and Rahman (2016), Dike and Micah (2018), Akeem, Memba and Willy (2016), Emmanuel and Udih (2015), Igbal, Sutrinso, Prinhat and Rosidi (2013), Asuqou, (2012), Godwin, Elvis and Abiola (2019) and Yahaya (2019) have been carried out on the impact of environmental accounting practices on performance, value and profitability in both manufacturing, banking and oil and gas sector. They examined environmental accounting practices but their focus was on its effect on performance, value and profitability in the manufacturing, banking and oil and gas sector while the goal of the study is to determine how environmental accounting practices employed by quoted food and beverages companies in Nigeria can affect their investment decision.

The study will focus on the effect of environmental accounting practices on investment decision. The researcher view looked into how environmental accounting practices is an investment and not an expense and also affect investment decision in the sense that, when the practices are carried out, it improves the performance of the company which in return improves the firm value in the market and also for more investment by potential investors and keep existing investors.

1.7 Significance of the Study

This research work will be of importance and benefit to several groups ranging from the management and policy makers in corporations, potential investors, shareholders, government, general public and further researchers.

This study will help management to know the length to which and in what necessary areas that environmental accounting practices has either a negative effect or positive impact on investment decision of listed firms. Since Environmental accounting has changing its standards and laws. Studies like this will help put them in check.

So far as prospective investors are concerned, this study would better educate them about how environmental accounting activities that will affect their investment decision and also help them decide whether to invest in it or not and determine if it will produce good or bad returns. Ethical investors will allow the businesses to be environmentally friendly as a result of the ethical investment movement, and thus attract support from "green" individuals and organizations by upholding and preserving such an image.

The study will also be of assistance to shareholders of listed food and beverages companies in knowing whether environmental accounting practices could possibly affect wealth since one of the main objectives of a business is to maximize shareholders’ wealth and would assist in informing other stakeholders with an interest in firm’s affairs.

The study will also help government make voluntary and compulsory disclosure on environmental accounting, and ensure compliance with various requirements set to enhance environmental accounting practices, as well as ensuring that businesses are environmentally friendly and encouraging them to invest in their environment to raise shareholder capital.

This work is aimed at informing the general public about how environmental accounting standards impact investment decision taking. Since environmental accounting practices relate to the atmosphere in which the general public lives, members of the community will have a vested interest in the business. Besides, it is beneficial to businesses as environmentally conscious general public to watch out for ethical responsible firms.

The analysis will also serve as a reference base for other scholars and researchers who subsequently have an interest in carrying out further work in this area, if extended it will go to some extent to give the subject a new understanding. It will promote transparency and accountability of environmental accounting information to investors and environmental regulatory bodies, and will also assist impacted communities in successful cost assessment of environmental remediation and compensation.

The work carried out would ensure that Nigerian corporate firms are committed to concluding international environmental regulatory agreements that will contribute to sustainable environmental growth and the eco-system in Nigeria by stimulating successful transition, access and production of national policies and programs for environmentally friendly technologies.

1.8 Scope of the study

The goal of the study was to analyze the effect of environmental accounting practices on the investment decisions of listed food and beverage companies in Nigeria. The population for this study was the quoted food and beverage companies in Nigeria. There were 23 food and beverage firms listed on Nigerian Stock Exchange (NSE) as at 31st December, 2018. The sample selected were ten food and beverage firms in Nigeria. The geographical location covered by the study is Lagos state, Nigeria. The time dimension of the study was for ten-year starting from 2009 to 2018. The variables adopted for this study involved environmental accounting practices measured by safety related measure disclosure, waste management disclosure, environmental protection disclosure, control variable represented as firm size while the dependent variables, investment decision is proxied by market price per share, volume of shares traded and market capitalization. The data collected were from the financial statements of the companies under sample limited to ten financial years, from 2009 to 2018 using the financial statements of the sampled firms. Data review and research interpretation were performed at Babcock University, Ilishan-Remo, Ogun State.

1.9. Limitations of the Study

The limitations of this study arose from the following:

Financial Constraints: This research work required numerous expenses; hence, the limited resources available for this research due to poor economic conditions was not good enough to take care of expenses such as transportation, internet subscription and cost of typing, printing and binding the work. The researcher overcame this constraint by subscribing to the Babcock University Students’ Association Wi-Fi, which was cheaper and had more data. In addition, the researcher bought some A4 papers used for printing to reduce cost and always did the typing.

Time constraint: Time constraint was a limitation to this research work due to the narrow time made available for a research of this context to be carried out including the academic workload and professional examinations accompanied with it, which also limited the time available for this study. The researcher overcame this constraint by preparing a timetable to guide daily activities, study time and project time. The researcher also adhered to this timetable and deferred some professional examinations in order to reduce workload.

Accuracy of the information: The analysis was based on secondary data gathered as public and pertinent ratios computed from the financial statements of these companies. The outcome of this research will not be true if the financial statements relied upon for a faithful representation and true and fair view of the financial operations of the companies are false. To overcome this challenge, the financial statements used were those published in which professional external auditors had expressed an unqualified opinion.

1.10 Operationalization of Variables

1.10.1 Mathematical Model

To evaluate

Abbildung in dieser Leseprobe nicht enthalten

These will result to an expanded functional model of:

Abbildung in dieser Leseprobe nicht enthalten

The associated regression model is discussed in chapter three

1.11 Operational Definition of Terms

The following terms are key to the research work and appropriate meanings have been given to them.

Environmental Accounting: This is described as the compilation, review and evaluation of environmental and financial performance information obtained from information systems for business management, environmental management, and financial accounting.

Environmental protection disclosure: This is the information disclosure on preventive environmental management activities costs such as cleaner production projects.

Waste management disclosure: This is the disclosure of information on costs related to the storage, treatment and disposal of waste and pollutants, remediation and compensation costs due to harm to the environment; and any regulation due regulatory enforcement costs; such as equipment depreciation, running supplies, water and electricity, internal personnel, external facilities, fees, taxes and licenses, penalties, insurance and remediation, and co-operation.

Safety related measures disclosure: This is described as disclosure of safety measures that companies employ to ensure that workers and the general public are protected from risk.

Firm Size: It is the firm’s capacity measured by the log of its total assets.

Investment Decision: It relates to the decision made by the investors or the top-level management with respect to the fund value to be deployed in the investment opportunities.

Market price per share: It's the price a stock can be readily purchased or sold at the current market place. The overall market value of the company is determined, divided by the total number of outstanding securities.

Volume of shares traded: This is the total quantity of stocks traded for a specified security during a given period of time.

Market capitalization: This refers to the firm’s total market value of its outstanding shares.

CHAPTER TWO: REVIEW OF LITERATURE

The chapter focuses on the analysis of the related literature on environmental accounting practices and investment decisions of listed food and beverage companies in Nigeria. The chapter is divided into five sub-sections: conceptual analysis, theoretical analysis, empirical review, discrepancies in literature, and the researcher's conceptual model.

2.1 Conceptual Review

2.1.1. Environmental Accounting

Environmental accounting is characterized as gathering, analyzing and assessing environmental and financial performance information obtained from information systems for business management, environmental management and financial accounting (Abubakar & Akomolafe, 2017). The corrective management action to minimize environmental impacts and costs plus the formal reporting of environmental and financial benefits in checked corporate environmental assessments or the publishing of annual reports and accounts where appropriate (Environmental Agency, 2010). It is a growing accounting field that defines resource use, monitors and communicates costs of an enterprise or national economy with real or potential environmental impacts (Osemene, 2010).

Environmental accounting is a critical field of accounting that offers information for both internal use, that is, information related to the management of pricing, expenditure control and budgeting; and external use that includes revealing public and financial sector environmental details of public concern (Yakhou & Dorweiler, 2004). The authors noted that accounting plays a function of expectation in the assessment of environmental efficiency, with the growing emphasis on the environment.

Godwin (2019) described environmental accounting as the identification, compilation, estimate and analysis of environmental cost information for superior company decision making. This can be characterized as the collection, analysis and use of financial and non-financial information to maximize corporate, environmental and economic efficiency, achieving a sustainable business the main goal of environmental accounting is to clearly identify increasing environmental cost operation, distinguishing non-environmental costs from environmental costs. Implementing an environmental accounting system will also provide more reliable information for analytical choices, as environmental accounting ensures that management decisions are taken with expertise. Environmental accounting is a path that is promising and evolving, and its aim is to define, calculate and communicate the costs from a firm's real or possible environmental effects (Charles, Racheal & Umeoduagu, 2017). Including environmental information in a company's accounting system is one way to begin incorporating sustainable growth into day-to-day business decisions.

Environmental accounting is a method that aims to make the best possible objective calculation (in terms of either monetary or physical units) of an enterprise's costs and benefits as a result of its environmental protection activities (Islam, 2018). Different studies address the issue in various ways: accounting for environmental management, corporate social reporting, social accounting, social and environmental accounting (Magara, Aming & Momanyi, 2015), social and environmental reporting, social and environmental accounting.

Environmental accounting is used to calculate maximum environmental costs associated with operations and goods, according to Saman (2019). It also emphasized that environmental accounting should be used to measure the organization’s environmental performance in a more tangible way. The main areas for control are aggregated pollution to air, discharge of the water effluent, contamination of the soil and the amount of boundary noise. Yahaya (2018) also took the view that environmental accounting requires the detection and reporting of real environmental costs, such as the cost of liability or the cost of disposal of waste. Environmental accounting involves any costs and benefits that arise from changes to a firm’s products or processes, where the change also involves a change in environmental impacts.

2.1.2 Environmental Accounting Practices in Nigeria

Environmental engineering research has resulted in resource loss and environmental degradation, leading to destruction of the ozone layer, leading to inequality in the environmental system (Egbunike & Tarilaye, 2017). Consequently, the environmental degradation, the loss of resources and the protection of highly concerned economic activities have rendered environmental accounting and area of significance interest coverage (Adediran & Alade, 2013). Environmental Accounting is thus a new concept in Nigeria at present, which aims to analyze the side effects of physical environment in terms of production and consumption (Adediran & Atu, 2010). Such results will be recognized in the financial reports of the company. There are several laws in Nigeria which govern the financial reporting of the firm quoted on the Nigeria Stock Exchange. Some of the laws are; -

1. Companies and Allied Matters Act 1990
2. Nigeria Accounting Standard Board (NASB), now Financial Reporting Council of Nigeria (FRCN)
3. Investment and Security Act 1999
4. Bank and other Financial Institutions Act 1991
5. The Insurance Act 1997
6. Security and Exchange Commission Law. None of the professional bodies, regulatory authorities or regulations overseeing such undertakings have made it mandatory for businesses to disclose their environmental activities.

The Federal Government, for its part, has enacted many environmental policies through the Ministry of Environment and Natural Resources in its attempts to enhance environmental disclosure by companies. These environment laws are aimed at;

1. Imposing of restriction on toxic release into the environment.
2. Stipulating requirement in which companies generating waste must meet.
3. The establishment of contingency plans for handling unusual, accidental waste disposal and development of waste reduction strategies.
4. Making it mandatory for establishment to install facilities capable of reducing or eliminating pollution arising from their production activities.
5. The maximum effluent limits are specified for disposal into air, streams, rivers, drains and soil.

However, the problem with Nigeria is not the enactment of laws and regulations but implementation of the same.

2.1.3 Environmental Acts and Regulations in Nigeria

Okafor (2018) claimed that the constitution of Nigeria, which governs the functions of the country, acknowledges and provides for the need for environmental change and security through relevant sections of the constitution include:

1. Section 20; this makes it Nigerian State objective to improve and protect the air, land, water, forest and wildlife of Nigeria.
2. Section 12 specifies, although indirectly, that international treaties (including environmental treaties) ratified by the National Assembly will be enacted as laws in Nigeria.
3. The National Environment Standards and Regulation Enforcement Agency (NESREA) Act of 2007 which replaced the Federal Environmental Protection Agency (FEPA) Act; is a variety of Laws and regulations for the preservation and conservation of the environment and for the production of natural resources;
4. Section 8 (1)(K) of the act gives the Agency the power to implement and review air and water quality regulations, effluent restrictions, regulation of substances that are hazardous to the atmosphere and other types of pollution and sanitation.
5. Lastly but not the least Section 4 and 5 of NESREA claims that companies should record discharge cases and make a detailed list of chemicals used for development accessible to the government (Nigeria Environmental Law Research Institute, 2011). The extent of accounting of the environmental costs by oil and gas firms is often far from acceptable or complies with international standards

2.1.4 Investment Decision

Investment judgment is as old as man and is now veiled in the mystery of the ancients. The decision is taken out of the need to make potential plans for difficult times. The need to that uncertainty associated with potential consequences of the current acts has rendered investment decisions impeccable. However, the assurance of potential results has always been elusive as a result of shifts in seasons and environmental factors that reinforce the principle of risk (Oladapo, 2015). Investments can be described as a fund commitment made in terms of positive rate expectations, return expectations that are essential elements of the investment. It's an operation that people who have savings, i.e. investments are made from savings, participate in. People invest their savings (Bamidele, Ibrahim & Omole, 2018) but not all savings are investments. Nearly all investors have the same basic objective level, which is to achieve maximum investment growth at the lowest minimum risk level. Whether as an experienced investor or as a new investor, an in-depth understanding of certain main financial principles is necessary. Some investment factors, which are foundations, are being addressed in this report. There are various angles when considering investment concept (Naveed, Zhang & Zou, 2016). There is no commonly accepted interpretation of this term as investments marked by individuals from various perspectives. The concept of investment should therefore be taken from two viewpoints i.e. the financial and economic importance of the investment.

2.1.5 Measurement of Investment Decision

2.1.5.1 Volume of Shares Traded

Here are different definitions of what volume of traded shares means as a consequence of which there is no widely accepted concept of the volume of traded shares involved. According to Nelson (2011), the number of traded shares can be considered to be the total number of shares actually exchanged (bought and sold) during the trading day or stated fixed time period. Charles, Racheal and Umeoduagu (2017) described this as measuring total share turnover. The volume of traded shares can also be defined as the number of shares exchanged in a security over a given period of time. In addition, the amount of trading is a function of the total shares that have changed hands over a given period of time (Emmanuel & Ambrose, 2018).

The number of traded shares is one of the most critical and basic principles to consider while trading stocks. Adediran and Alade (2013) took the view that volume is the lifeblood of the stock and represents the trading activity of the interest in said securities. Heavier volume displays more value and vice versa or lighter volume. In several cases, an increase in volume appears to cause major price moves; however, this is not a necessity (Musa, Teru & Bukar, 2015). A good measure of volume would provide useful information on underlying economic conditions, in particular on why investors trade and how they trade.

2.1.5.2 Market price per share

In the present financial setting, the market value per share is that the stock price can be readily purchased or sold. In other words, the market value per share is the "going price" of the stock. The stock market and economy are unpredictable and fluctuations in firm stock prices follow. The market value of a stock is often exposed not only to the economy as a whole but to the predictions and aspirations of investors as well. The market price is the actual price that a share can be bought or sold at (Islam, Miah & Fakir, 2015). Economic theory says the consumer price converges at a point where supply and demand powers intersect. Shocks to either the supply side and/or demand side may lead to a re-evaluation of the market price for a product or service (Yahaja, 2019). The market price of a security is the most recent price at which the security was traded and is the result of transactions between traders, investors and dealers in a market.

Market price per share of common stock is a useful analytical method and instrument used when assessing and deciding whether an investment in a business is important, competitive and worthwhile. After measuring the market price per share or value of a product, compare it to the price reported online or in the newspaper (Okafor, 2018). Cross-checking market price estimate with one of the many on-line calculators is a successful practice. It should be remembered that since the balance sheet is calculated on a historical cost basis, the stock price is not equal to the book value (Sani, 2018).

2.1.5.3 Market Capitalization

This refers to the total market value of a company's outstanding shares. Commonly referred to as "market cap," it is determined by multiplying the outstanding securities of a company by the actual one-share market price. It can also be said to be the company's summation valuation based on its current share price and the total number of stocks outstanding (Adediran & Alade, 2013).

2.1.6 Measurement of Environmental Accounting Practices

2.1.6.1 Safety related measure disclosure

Prevention of harms defines high standards and best practices with respect to a safe and healthy work environment (La & Muah, 2019). Best practices include following the control system in industrial hygiene, and its approach to risk management hazards. Good practices also include respect for human capacities and tolerances as defined in the ergonomics and toxicology sciences (Cho, Chung & Young, 2019), as well as the concepts of implementation of process safety management. The use of hazardous facilities, machinery, procedures and activities may have health and safety impacts. They can also occur while using dangerous chemicals, such as chemical, physical, and biological agents. In general, low accident and absentee levels are correlated with favorable morale and productivity patterns (Azhar, 2019). This report states that procedures in managing health and safety result in fewer accidents in occupational health and safety. An assessment of trends and patterns may also indicate potential job inequity (Occupational Health and Safety, 2016). This disclosure is of particular interest to organizations employed in countries with a high risk or occurrence of communicable diseases and those in occupations with a high incidence of different diseases. Preventing serious diseases contributes to health, satisfaction, and low turnover rate. Formal agreements can promote the acceptance of responsibilities by both parties and the development of a positive health and safety culture. This disclosure revealed the extent to which workers are actively involved in formal, labor-management agreements that determine health and safety management arrangements (Organization for Economic Co-operation and Development (OECD, 2011). The criteria to be followed for the disclosure of waste management are: maintaining the health and safety of staff, consumers and other stakeholders; actively trying to identify and minimize the risk for accidents or injuries in all operations; training and coordination on health and safety concerns; encouraging awareness on health problems, providing adequate health facilities and providing financial services as necessary. The study will follow five different metrics / indexes, including transparency to ensure the health and safety of workers, consumers and other stakeholders; ongoing efforts to recognize and minimize the risk for accidents or injuries in all operations; reduction of HIV discrimination among workers; provision of adequate health services and financial assistance for treatment.

2.1.6.2 Waste management disclosure

Waste is part of the economy, through corporations, governments and families, it is a through-product of industrial activity. Waste is also an entry into economic activity, whether by material or energy recovery (Environment, Food and Rural Affairs Department, 2011). Waste management has economic implications for production, government spending and, of course, for the environment. Decisions by businesses on how to handle waste effect on their profitability. Where the benefits outweigh the costs, by reducing the use of costly raw materials, businesses can reduce their operating costs and increase profitability. Likewise, costs can be minimized by minimizing subsequent waste management. Consumer decisions in buying goods and services that contribute to waste affect not only on the environment but also on the amount of government spending that local authorities need to collect and handle household waste. Together with the socioeconomic impacts of waste, there are microeconomic issues surrounding waste policy creation. Waste policy is a vital aspect of making effective use of the raw materials. However, failure to properly account for their interest in economic decisions implies over-consumption of those resources (Akinlo & Iredele, 2014). That is the disclosure of information on costs related to the storage, treatment and disposal of waste and pollution, remediation and recovery costs due to environmental damage; and any regulation due regulatory enforcement costs; such as depreciation of equipment, operating materials, water and electricity, internal personnel, external facilities, fees, taxes and licenses, penalties, insurance and remediation and compensation (Islam, 2018). The indexes to be followed for the disclosure of waste management as set out in Donatiello (2001) are Municipal Waste Collection Kg per capita, Municipal Waste Collection by form (paper, glass, plastic, aluminum, iron, wood, organic waste, etc.) Kg per capita, Amount of waste treatment and disposal facilities, Availability and use of recycling facilities within the Municipal Waste Collection Kg per capita. The study will follow five specific metrics / indexes, including the declaration of waste for disposal in landfills, the availability and usage in recycling facilities within or in other jurisdictions, the separation of waste and the successful disposal of waste from recycling sites, and a range of initiatives to increase separate collection of waste from households.

2.1.6.3 Environmental protection disclosure

Duke and Kankpang (2013) argued that capital markets are reacting to knowledge about the environmental performance of a business and can provide sufficient financial and reputational opportunities for pollution control if properly informed. Maybe more resources can be used to disseminate firm-specific environmental performance information to allow all stakeholders to take informed decisions. Capital markets will react negatively to news of adverse environmental changes (e.g. spills or violations of permits) and announce the use of cleaner technology by a company. The authors analyze the reaction by the participants to the announcement of company-specific environmental news (Godwin, 2019). They show that: Stock markets (market value rises for firms) respond favorably to announcements of incentives and clear acknowledgment of superior environmental performance (Global Reporting Initiative, GRI, 2011). Investors respond negatively (value decreases for the firms) to complaints from people (Basit, 2016). The effect of company-specific environmental news on market value can work its way across multiple channels: a high level of pollution rate can signal the inefficiency of the company's manufacturing process to investors; it can call for further attention by environmental organizations and/or neighbors in the facility; it can lead to loss of credibility, goodwill, etc. On the other hand, reporting a successful environmental success or investing in green technology may have the opposite effect: less scrutiny by regulators and societies (including the financial community), greater access to foreign markets (Oba, 2012). The indices to be adopted for the safety of the environment as set out in Donatiello (2001) are Air pollutants in urban areas, Fixed monitoring site density, Amount of air pollutants monitored and Number of days of traffic restriction (non-catalyzed passenger cars), Electricity consumption per capita, Electricity consumption by sector (residential, commercial, agricultural, communal), Public green density by typology (town parks, historic green areas, green neighborhoods, green belts, special green areas-school gardens, botanical gardens, green playgrounds, etc.), development of new green areas by year, annual green area census and implementation of the Green Town Plan, number of fixed noise, noise control sites, number of implementation sites (Industrial operations, traffic, recreation operations), Number of municipal authorizations for temporary acoustic emission activities by category (musical events, sporting events, noise equipment, others), Amount of fines or road noise attributable to passenger vehicles, Implementation of the Acoustic Zoning Program, Implementation of the Noise and Deterioration Program. The study will adopt five different metrics/indexes which includes disclosure on energy use reduction, reduction in greenhouse gas, waste use reduction, environmental KPI performance and electricity usage.

2.1.6.4 Firm size

Firm size can be defined in the literature as the total assets, scale of operations and number of employees among others. Big companies are assumed to have more assets at their disposal and therefore have the wherewithal to commitment them to several investment opportunities. The firm size can be measured in number of ways; market cap, total revenue, and total assets, and these measures are the most prevalent firm size proxies in empirical corporate finance research (Dang & Li, 2015).

2.2 Theoretical Review

2.2.1 Stakeholders Theory

Freeman (1970), the proponent of the theory stated that there is one and only one firm social responsibility for resources usage and engagement in activities designed for profit increase. The stakeholder concept was first used in 1963 internal memorandum at the Stanford Research Institute. According to Bassey, Sunday and Okon (2013), the theory's basic proposition is that the success of the organization depends on the management performance of all the relationships it has with its stakeholders or was initially set up by the Stanford Research Institute (SRI) means these groups without whose assistance the organization would cease to exist (Freeman, 1983). Freeman (1983) addresses the definitions of stakeholders in categories in the sense of stakeholder theory: a company strategy and policy model; and a corporate social responsibility or stakeholder management model. The first model analyzes stakeholders with a view to developing and assessing the acceptance of corporate strategy decisions by groups whose support is needed for the continued existence of the organization. In this model, stakeholders include owners, customers, public authorities and suppliers. Although these groups are not of an adversarial nature, their potentially contradictory activity is considered a constant in the strategy built by management to better align the resources of their businesses with the environment (Deegan & Gordon, 1996).

The second model analyzed the strategic planning and analysis to include external factors that may be averse to the company. Such adverse groups can include the legislative climate and/or the special social interest groups (Guthrie & Parker, 1990). The second model allows administrators and accountants to find a corporate plan that is responsive to the social needs of non-traditional stakeholder groups. The stakeholder theory suggests that companies need to expand their strategic plans to include non-traditional stakeholders, such as regulatory opposing parties, in order to drive improvements in demand theory (Bassey et al, 2013).

2.2.2 Political Economy Theory

Adams Smith (1776) developed the theory in his book, an inquiry into Nature and the Causes of the Wealth of Nations. Political economy is a problem which involves the implementation of economic theory in the study of political actions and institutions (Mohammed, 2016). This is also considered to be the social, political and economic setting in which human life occurs (Hassan & Kouhy 2014). From this theory, environmental disclosures represent social, economic and power differences and business climate inconsistencies (so corporate reporting is a transparent way for corporate managers of communicating the perception of their activities' social, political and economic aspects (Rosser & Edwin, 2010). Social disclosure in corporations therefore aims to create, maintain and legitimize economic and political structures which promote private corporate interests. Studies that find the political economy theory useful in describing companies' social and environmental disclosure (Uwalomwa & Jafuru, 2012).

2.2.3 Legitimacy Theory

The theory of legitimacy derives from the concept of organizational legitimacy which Dowling and Pfeffer (1975) have defined. Legitimacy is seen as the general belief that a firm's acts are sufficient, necessary, or right within the standards, principles, and concepts of the nation (Suchman, 1995). Hence, the society enables businesses to continue their operations when they fulfill their standards (Deegan, 2007). The state is therefore the basis of legitimacy for organizations from the supposed nature of social contracts between the company and community. Thus, when a company is viewed as failing in its social contract, a difference in credibility is said to emerge (Donaldson, 1982). In these situations, the firm may enforce sanctions in the form of operations on the company, restricting its access to resource restriction and the demand for its products by boycotting it. Low credibility can also result in the forfeiture of a license to operate for an entity (Tilling & Tilt, 2010). It is therefore necessary for a firm to ensure its continued credibility through the identification and management of its features (Haji, 2013). First, to ensure that the firm's operations are in line with public expectations and perceptions; second, to report the organization's operations as being consistent with society (Sani, 2018).

Lindblom (1994) described four techniques that can be used by a firm to obtain or retain credibility. Next, by presenting information to offset or mitigate negative media coverage about the company, the firm can make efforts to inform its related public about the improvement of its activities or performance. Second, an organization can attempt to change the views of the general public rather than alter its actual activities by providing interested parties with information on its previously unknown attributes. Second, a firm may try, by way of appeal, to influence the opinion of the relevant public by distancing its focus from a key issue of interest to related issues. The organization can, for example, draw attention to the environmental award of safety measures earned or implemented; to the reduction of environmental contamination or injuries at work. Fourth, a firm can try to change the perceptions of its activities by the general public. Firms can use each of the above techniques to participate in social disclosure (Lindblom, 1994). The principle has been found to be useful in describing environmental accounting practices.

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