CAPITAL STRUCTURE AND CORPORATE ENVIRONMENTAL RESPONSIBILITY OF INDUSTRIAL GOODS FIRMS LISTED ON NIGERIAN EXCHANGE GROUP
Keywords:
Capital Structure, Debt to Asset Ratio, Debt to Equity Ratio, Environmental Disclosure Index, Environmental Responsibility, Long-Term Debt to Equity Ratio, Short-Term Debt to Asset RatioAbstract
The study examined the effect of capital structure on the environmental responsibility of listed industrial goods firms in Nigeria. The study specifically examined the effect of debt to equity ratio, debt to asset ratio, long-term debt to equity ratio and short-term debt to asset ratio on environmental disclosure index of listed industrial firms in Nigeria. The ex-post facto research design was used in this research alongside a sample size of eleven (11) companies purposively selected from a population of thirteen (13) industrial goods firms listed on the Nigerian Exchange Group. Secondary data was retrieved from the corporate annual reports of the sampled firms for the period 2012-2021 financial years. Pooled Ordinary Least Square variant of panel regression was conducted at 5% level of significance. The findings revealed that: debt to asset ratio significantly and positively affects the environmental disclosure index of industrial goods firms listed on the Nigerian Exchange Group (β = 0.147697, p-value = 0.0090); debt to equity ratio does not significantly affect the environmental disclosure index of industrial goods firms listed on the Nigerian Exchange Group (β = -0.000390, p-value = 0.8946); long-term debt to equity ratio does not significantly affect the environmental disclosure index of industrial goods firms listed on the Nigerian Exchange Group (β = 0.000872, p-value = 0.9012); short-term debt to asset ratio significantly and negatively affects the environmental disclosure index of industrial goods firms listed on the Nigerian Exchange Group (β = -0.113424, p-value = 0.0353). It was concluded that involvement in environmental responsibility shapes the external perceptions of a firm by helping relevant stakeholders assess whether the firm is a good corporate citizen, and thus justifies the firm’s continued existence even to lenders as well as shareholders. It was recommended that government should encourage companies to engage in environmental initiatives through the development of incentives and subsidies for environmentally responsible firms, as well as through increased public awareness about the importance of environmental sustainability.
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