Influence of environmental accounting information on creditor decision-making in Nigeria

Abstract

This study examines the main factors that influence environmental accounting Information in Nigeria using Exploratory Factor Analysis (EFA). Given the increasing importance of environmental sustainability in corporate reporting, understanding the factors that drive environmental disclosures in Nigeria is crucial. The research analysed data from a sample of Nigerian companies across different industries using EFA to identify the key factors that shape their environmental accounting practices. Structured questionnaire was distributed to respondents with the view to compare their perception and experience on prevailing factors. The findings revealed several significant indicators, which are grouped across four factors namely; Environmental Expenditure Reporting, Carbon Emission Disclosure and Environmental Liability Recognition and Creditors Decision Making. Also, companies may need to focus more on immediate, tangible aspects of environmental accounting rather than broader, long-term sustainability initiatives to satisfy current market and regulatory demands. The paper recommends that companies needs to understand the specific environmental factors that influence creditor decision-making, such as Carbon Emission Disclosure and Environmental Liability Recognition, can aid in tailoring reports to meet stakeholder expectations, particularly those of financial institutions.