CORPORATE ESG ACTIVITIES AND FINANCIAL REPORTING QUALITY: EVIDENCE FROM LISTED NON-FINANCIAL FIRMS IN NIGERIA

Abstract

Financial reporting in Nigeria continues to face challenges such as earnings manipulation, inconsistent disclosures, and weak comparability despite ongoing regulatory reforms. At the same time, global and local stakeholders increasingly demand Environmental, Social, and Governance (ESG) disclosures as part of transparent and credible corporate reporting. This study was undertaken to evaluate how environmental sustainability practices, corporate governance mechanisms, and social responsibility initiatives influence the financial reporting quality (FRQ) of listed non-financial firms in Nigeria. An ex-post facto design was employed, using secondary data extracted from annual reports and sustainability disclosures of 84 firms selected using a multistage sampling technique from 106 non-financial companies listed on the Nigerian Exchange Group between 2018 and 2024. Data were analyzed using panel regression models with appropriate robustness tests. The findings revealed that environmental sustainability, corporate governance, and social responsibility each exert significant positive effects on FRQ, while firm size strengthens these relationships. The study concludes that ESG practices, when genuinely implemented, enhance the credibility, transparency, and comparability of financial reports. It recommends the adoption of standardized ESG disclosure frameworks, stricter enforcement of governance codes, and capacity-building support for smaller firms to improve Nigeria’s financial reporting environment