Explanatory and Moderating Factors of Sustainability Reporting of Listed Financial Firms in Nigeria

Abstract

Given the multi-faceted nature of factors influencing sustainability reporting and the changing board characteristics over time, this study investigates the moderating role of board size and independence in the relationship between firm attributes, financial performance, and sustainability reporting. Data from 24 listed Nigerian financial firms, from 2011 to 2022, were analyzed using descriptive, inferential, and econometrics tools. We employed the dynamic panel data technique (system generalized method of moments) for estimation. We found a significant effect of firm size and liquidity on overall sustainability reporting. Including board characteristics in models yielded more important results. Older firms with large boards reported more sustainability activities—Ditto for firms with large boards and large market value. However, large firms with large boards reported more sustainability activities, similar to the result obtained for firms with large boards and high liquidity. Surprisingly, profitable firms with larger independent directors reported less on social and economic sustainability activities. Conclusively, firm attributes played more significant roles in predicting sustainability reporting, while board size was a better moderator of the nexus between firm attributes, financial performance, and sustainability reporting. These portend policy implications like the need to integrate sustainability policies into core business strategies, operations, and governance.