Abstract:
Unprecedented human-induced climate change has been witnessed, majorly
attributed to industrial-related activities that result in depletion of natural
resources as well as harmful emissions. This has increased the global concern
for the environment, with more stakeholders demand for corporate ecological
reporting. However, reviewed studies indicate varying degrees of corporate
ecological reporting, with others severely deficient of it. The objectives of the
study were to evaluate the moderating effect of financial strength on the
relationship between environmental sustainability disclosures and corporate
characteristic, ownership structures as well as internal controls. The study was
guided by stakeholders, legitimacy and agency theory. It study employed a
correlational survey research design on a panel datacovering the period of five
(5) years (2013 - 2017). The target population was sixty-five (65) firms listed
in NSE, with a sample size was 56 firms, purposively selected. Data used was
from firms’ annual reports, stand-alone reports, and website, collected using
checklist. Analysis of data was done with the aid of Stata using environmental
disclosure index, Pearson’s correlation, Fixed effect model and. Content
analysis was used to attach scores on environmental information disclosures
through a checklist developed under the guidance of the Global Reporting
Initiatives. The study findings indicated that R² = 0.64 with board size (β= .01,
ρ<.05), institutional ownership β= .05, p<.01), audit committee independence
(β= .12, p< .05), board independence (β= .24, p<.05) and board
qualifications(β= .07, ρ<.05) having a positive and significant effect
onenvirnonmental sustainability disclosure. However, board diversity (β= -.01,
ρ<.05) and ownership concentration (β= -.02, ρ<.05) had a negative but
significant effect on environmental sustainability disclosure while board
meetings had no influence on environmental sustainability disclosure. More
findings showed that financial strength strengthenthe relationship between
environmental sustainability disclosureand board independence (β = .23,
ρ<.01), institutional ownership (β = .14, ρ< .05), and audit committee
independence (β = .13, ρ<.01) However, the relationship is weakened with
regard to board diversity (β = -.03, ρ<.05), board meetings (β = -.16, ρ<.05),
ownership concentration (β = -.01, ρ< .05). The inclusion of the interaction
term resulted in an R² change of 0.03 (board charcteristics*financial strength),
0.13 (ownership structures*financial strength) and 0.09 (internal
controls*financial strength). The study concluded that, overall, financial
strength has significant moderating effect on the relationship between
corporate governance and environmental sustainability disclosure. It
recommends;enactment of policies addressing corporate environmental
reporting by firms as a result of different asset base, establishment of
corporate environmental committee to spearhead ecological issues, and
implementation of mandatory disclosures. Future studies need to focus on;
specific dimensions such as directors’ experience, age, and nationality, cross-vii
listing of the board, cross-country comparative analysis, and segment-wise
analysis.
