Effect of Firm Characteristics on Environmental Disclosure: The Moderating role of Board Independence

This study examined the effect of firm characteristics on environmental disclosure (ED) of listed manufacturing firms in Nigeria, with board independence serving as a moderating variable. The study aimed to assess the moderating influence of board independence on the relationship between firm size and environmental disclosure of listed manufacturing firms in Nigeria, as well as to investigate the moderating effect of board independence on the relationship between firm age and environmental disclosure.

A correlational research design was employed, with data extracted from the annual reports of 53 manufacturing firms listed on the Nigerian Exchange Group (NGX) over a six-year period (2019–2024). The extent of environmental disclosure was measured by calculating an annual ratio based on the total number of Global Reporting Initiative (GRI) items reported by each firm, derived through content analysis. Data were analyzed using the Ordinary Least Squares (OLS) regression technique.

The findings indicated that, for listed manufacturing firms in Nigeria, firm size has a significant positive influence on environmental disclosure, whereas firm age exerts a significant negative impact. Furthermore, the presence of independent directors differentially affects environmental disclosure depending on firm characteristics, reducing disclosure in larger firms while enhancing it in older firms. The study recommends that firms in Nigeria’s listed manufacturing sector, particularly smaller ones, should aim to increase their asset base, as larger firms tend to disclose more environmental information to maintain legitimacy and address societal concerns.

Additionally, because the presence of independent directors is found to increase environmental disclosure in older firms, shareholders of such firms should leverage this evidence to advocate for structural changes. Specifically, they can pressure company boards to increase the number of independent directors in order to achieve a majority of independent directors on the board, in line with the recommendations of the Nigerian Code of Corporate Governance (NCCG) 2018.