SUSTAINABILITY PRACTICES AND FINANCIAL PERFORMANCE IN LISTED OIL AND GAS COMPANIES IN NIGERIA AND GHANA: A COMPARATIVE INVESTIGATION
Keywords:
Economic sustainability, environmental sustainability, governance sustainability, social sustainability, Return on assets, Tobin's QAbstract
Background: Sustainability practices and corporate financial performance have become increasingly important in the corporate world, particularly for publicly listed oil and gas companies. Aims: The study investigated the effects of sustainability practices on the financial performance of listed oil and gas companies in Nigeria and Ghana. Methods: An ex post facto research design was employed, with panel regression estimates used to test the hypotheses. Secondary data were retrieved from the annual financial publications of the selected companies in Nigeria and Ghana. Sample: The study focused on 5 listed oil and gas companies in Nigeria and 5 listed oil and gas companies in Ghana using a purposive sampling technique. Results: Findings revealed that economic sustainability practices greatly improve RoA and Tobin's Q in Nigerian oil and gas companies, whereas the effect is statistically insignificant in Ghanaian firms. Environmental sustainability positively impacted RoA in Nigeria, but it had no significant effect on performance metrics in Ghana. Governance sustainability influenced financial performance in both nations, noting the significance of efficient governance structures in promoting financial results. Additionally, social sustainability practices enhanced firm performance in Nigeria, whereas their impact in Ghana was insignificant on RoA but significant on Tobin's Q. Conclusions: The research finds that sustainability practices significantly contribute to improving firm performance in Nigeria's oil and gas industry, especially in terms of economic, environmental, social, and governance aspects. Conversely, sustainability practices exhibit limited and varied impacts on firm performance in Ghana, with governance sustainability standing out as the most reliable factor influencing financial results in both nations. Implications: The findings imply that sustainability practices, especially strong governance structures, enhance oil and gas firm performance, with greater effectiveness in Nigeria than in Ghana due to differences in implementation and institutional support.
