Environmental Disclosure, Earnings Management And Share Prices Of Quoted Firms In Nigeria

Abstract :

This paper examines two discretionary activities utilized by managers to influence share prices. These discretionary activities are referred to as environmental disclosure and earnings management. In contrast to earlier studies, the aim of the study is to ascertain the impact of environmental disclosure and earnings management on firm share prices. The study adopts agency and signalling theory in providing a theoretical background to explain the relationship. The ex-post facto design was employed, which involved 70 non-financial firms for a 7-year period from 2011-2017. The study utilised a panel regression analysis to analyse the data and found environmental disclosure was positively related to firm share prices while earnings management appeared to have an inverse relationship. The results have implication for the signalling theory as well various stakeholders who wish to understand the dynamics surrounding the firm’s share price. The findings also suggest that investors in developing economies are well-informed about earnings management activities. The study recommends mandatory reporting of environmental information as well as improved standards to minimise earnings management and improve the quality of earnings.