MODERATING EFFECT OF FIRM SIZE ON THE RELATIONSHIP OF DENVIRONMENTAL COST AND FINANCIAL PERFORMANCE OF LISTED CONSUMER GOODS FIRMS IN NIGERIA

Abstract

The nexus between environmental cost and financial performance have remained contentious among scholars and practitioners, particularly in Nigeria's consumer goods sector, where prior studies focused predominantly on oil and gas industries with distinct environmental dynamics, overlooked firm size as a moderating variable, and employed methodological flawed designs that undermined the applicability of findings to consumer goods firms. The study examined the moderating effect of firm size on the relationship between environmental cost and financial performance of listed consumer goods firms in Nigeria, anchored on the Resource-Based View (RBV). The study adopted an ex-post facto research design with a population of 21 listed consumer goods firms on the Nigeria Exchange Group, from which 13 firms were selected as sample using purposive and judgmental sampling techniques. Secondary data were extracted from the annual reports of sampled firms covering a fourteen-year period from 2011 to 2024. Data were analyzed using panel regression model with the aid of E-Views 10 statistical software. Findings revealed that community development cost had a positive and significant effect on return on capital employed, while waste management cost exerted a negative and significant effect on return on capital employed. Firm size alone was insignificant, but the interaction terms confirmed that it significantly moderated both relationships. It was recommended that consumer goods firms should strategically intensify community development expenditures to enhance financial performance and adopt cost-efficient waste management technologies to prevent profitability erosion.