HOW DOES ENVIRONMENTAL AUDITING AFFECT PROFITABILITY AND LIQUIDITY OF QUOTED MANUFACTURING COMPANIES IN NIGERIA?

Abstract

Environmental pollution are natural tendencies in the industrialized community and it is dangerous to the health of people living in the industrialized environment. This study examined the effect of environmental auditing on profitability (using Return on Asset (ROA) and liquidity Quick-Test Ratio) of quoted manufacturing companies in Nigeria. The study adopted ex-post facto research design with secondary source of data using audited financial statements and annual reports for ten (10) year period from 2013 to 2022 obtained from selected quoted manufacturing companies with a population of forty-two (42) listed companies on the floor of the Nigeria Exchange (NGX); out of which a sample size of twelve (12) were selected using probability sampling. Descriptive and inferential statistics were used for the data analysis. Regression Analysis was adopted to test the hypotheses. The result of the findings indicated that environmental auditing has significant effect on the Profitability (AdjR2=0.495 f–statistics of 59.400 with p-value of 0.000<0.05); on Liquidity, (AdjR2=0.477 f-statistics of 5.934 with p-value of 0.004<0.05); of quoted manufacturing companies in Nigeria. The study concluded that Environmental auditing has significant effect on profitability and liquidity of quoted manufacturing companies in Nigeria. It recommended that Management should adopt good inventory management system and avoid unnecessary cost that can emanate from obsolete and spoilt inventory in order to avoid loss of profit and liquidity. They should comply with all required Environmental Sanitation and Health related standard, rules and regulations.