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DETERMINANTS OF CORPORATE SOCIAL AND ENVIRONMENTAL
DISCLOSURE OF NIGERIA OIL AND GAS COMPANIES
Evbota Cephas.I. B.Sc; M.Sc
Chukwuemeka Odumegwu Ojukwu University, Uli, Anambra State
Ukori C.A. B.Sc; PGD; M.Sc
Chukwuemeka Odumegwu Ojukwu University, Uli, Anambra State
Dr. Paschal Ohalehi
DeMontfort University, Leicester, United Kingdom
Abstract
The paper examined the various determinants of corporate social and environmental
disclosures in the oil and gas sector. The broad objective of the study was to examine the social
and environmental disclosure of oil and gas companies in Nigeria and also to investigate the
impact of firm size, profitability, financial leverage, firm age and audit firm size on social and
environmental disclosure of oil and gas companies in Nigeria.
A cross sectional survey research design was utilized by the study. With respect to
sample selection, a total of 10 oil and gas companies were selected out of the 17 oil and gas
companies quoted on the floor of the Nigerian stock exchange for the period of 4 years ranging
from 2011 to 2014.
From the result of the descriptive statistics it was observed that corporate social and
environmental disclosure stood at a mean value of 0.522 therefore indicating that the degree of
social and environmental disclosure of the sampled companies stood at 52%.
Keywords: Social and environmental disclosure, Legitimacy theory
1.0 INTRODUCTION
1.1 BACKGROUND TO THE STUDY
The insecurity of life and properties of oil producing companies in the Niger Delta area
of Nigeria is a classic example of insufficiency and inadequacy of economic performance and
efficiency for organizational survival and growth. Nigeria, like most of the developing countries
is a mono economy nation. It derives the majority of its income from the oil and gas industry - an
industry that is heavily reliant on environmental resources and consequently degrades and
pollutes the environment. Nigeria is an example of developing countries that (Myers, 1994)
describes as having massive degradation and destruction of environmental systems and natural
resources threatening their continued and sustainable development. Olorode(2000) traced the
origin and the dynamics of the Nigerian Civil war of 1967 to 1970 to socio-political factors in
the petroleum industry. The socio-environmental induced crisis in the oil and gas sector of the
economy is a national knowledge that has created very serious security problems to life and
property in the area at a worsening dimension since the execution in 1995 of Ken Saro-Wiwa, a
renowned playwright and environmentalist. It is expected that managers of economic entities in
Nigeria should take a cue from the oil and gas industry of the limit to economic growth of firms
that take no account of social and economic dimensions of their relationships with the society
where they operate.
The earth environment is a free gift of nature given to us by God and there are a lot of
economic activities going on this earth given to human kind by nature. The present civilization
has involved us in various activities. Many of these activities generated waste with potential
constituents; the ultimate disposal of this waste lead to environmental pollution in many parts of
the globe. The magnitude of pollution of the environment is increasing every day (Bassey, Effiok
& Eton, 2013). Economic development generates environmental impacts. Although many
corporations take responsibility for their environmental impacts, a responsibility reflected in their
willingness to make public disclosures of behavior with environmental implications.
Recently, the adverse environmental effect of development of Oil and Gas Company has
become a matter of great public interest to all over the world. Accountants, as the basic custodian
and light bearer of economic development can no longer shut their eyes to the effect of
environmental issues (Omar, 2014). The coming of liberalization, removal of trade barriers make
it logical that the costs of environmental degradation due to industrial activities should be
internalized in corporate account as much as possible; this is what makes corporate social and
environmental disclosure important today. Research attention over the years has attempted to
understand and explain this area of corporate reporting which appears to lie outside the
conventional domains of accounting disclosures. The evolving challenge in contemporary
business firms is the need to reconfigure their performance indices to incorporate societal and
environmental concerns as part of the overall objective of business. Environmental and social
reporting provides a strategic framework for achieving this holistic re-appraisal of corporate
performance. Although it is not a new concept, environmental disclosures remain an interesting
area of discourse for academics and an intensely debatable issue for business managers and their
stakeholders.
The need to communicate social and environmental effects of business operations to
society has been with us for over decades. Corporate environmental disclosure is increasingly an
important issue to corporate investors, public policy makers and the general public. These
disclosures are important because they provide environmental performance information and
influence capital markets (Villiers & Staden, 2011). Therefore, corporate investors and other
stakeholders need to use environmental information in their decision making. There is extensive
evidence that social and environmental information is useful for decision making by investors
and other stakeholders (Blacconiere & Patten, 1994; Richard & Welker, 2001). In response to
investors’ and other stakeholders’ concerns about corporate environmental disclosures many
firms are voluntarily increasing their level of social and environmental disclosures through
different sources and media. However, the most widely used and common are annual reports and
websites (Omar, 2014).
In view of the above, the broad objective of this study is to examine the determinants of
corporate social and environmental disclosure of Oil and Gas Company in Nigeria while the
specific objectives of the study is to determine the influence of firm size on environmental
disclosure; ascertain the effect of firm profitability on environmental disclosure; examine the
relationship between firm age and environmental disclosure; evaluate the effect of financial
leverage on environment disclosure and investigate the relationship between Audit firm size and
environmental disclosure.
2.0 LITERATURE REVIEW
2.1CONCEPTUAL FRAMEWORK
2.1.1 Social and Environmental Disclosure
Corporate social and environmental disclosure has grown considerably over the last 20 years
(Heledd & Natalia, 2005). It encompasses both the voluntary and mandatory disclosure made by
companies regarding issues that are important to a wide range of stakeholders, covering more
than solely economic concerns; environmental disclosure is part of wider corporate social
disclosure. Environmental disclosure refers to disclosure relating to the natural environment,
environmental protection and resource use, and social disclosure usually refers to disclosure
about the interactions of a company with the community, employees, and society at large
(Heledd & Natalia, 2005). According to Heledd and Natalia 2005, social and environmental
disclosure plays the following roles:
assessing the social and environmental impacts of corporate activities;
measuring the effectiveness of corporate social and environmental programmes;
reporting on corporate social and environmental responsibilities; and
external and internal information systems allowing the comprehensive assessment of all
corporate resources and sustainability impacts.
2.1.2 Firm Size
It is generally accepted that larger companies have greater tendency and greater social
obligation. Large companies are deemed to be more subjected to public exposure and often they
would face more legitimate issues than smaller companies (Watts & Zimmerman, 1978). Under
legitimacy theory, firms’ societal existence depends on the acceptance of society where they
operate. Since the firms can be influenced by, and have influences to the society, legitimacy is
assumed an important resource determining their survival (Deegan, 2002). The literature
suggests that larger firms are more likely to come under public scrutiny and are expected to have
more influence on the environmental practices of the general business environment. Therefore,
large firms with higher societal existence may have taken more legitimacy and may have a
higher reputation and involvement of social responsibility than smaller firms.
In the literature, the results regarding the association between firm size and
environmental disclosure are mixed. Some studies (Cormier& Morgan, 2004; Nasar et al., 2006;
Alarussi et al., 2009; Suttipun & Standton, 2011; Setyorini & Ishak, 2012; Akrout & Othman,
2013) found a positive relationship, although (Davey, 1982; Ng, 1985; Roberts, 1992; Barako et
al., 2006; Smith et al., 2007) did not find such a relationship. Based on the above discussion, it’s
expected that large firm will disclose more environmental information than smaller firms.
2.1.3 Profitability
The rationale for an influence of profitability on voluntary information disclosure is
obvious. Profitable companies have incentives to distinguish themselves from less profitable
companies in order to raise capital on the best available terms. One way to do this is through
voluntary information disclosure. Deegan (2002) stated that legitimacy theory hypothesize that
companies are bound to an unwritten social contract within the society where they operate.
Failure to comply with their legitimacy will threaten companies’ performance and survival.
Therefore, more profitable companies can be expected to disclose more voluntary social and
environmental information than non-profitable companies. However, the relationship between
corporate financial performance and corporate environmental disclosures is arguably one of the
controversial issues yet to be solved (Choi, 1998). The result of different studies measuring the
relationship between corporate financial performance and corporate environmental disclosures
show mixed result. An association between profitability and social responsibility disclosure has
been demonstrated in a number of empirical studies. (Smith et al., 2007; Janggu et al., 2007;
Akrout& Othman, 2013). However Cormier and Magan (2004) documented a weak association
between corporate social disclosure and profitability. While (Smith et al., 2007; Connelly&
Limpaphayon,2004; Rahman et al.,2010) found no significant relationship between profitability
and corporate social responsibility disclosure.
2.1.4 Financial Leverage
Agency theory suggests that the level of financial information disclosure increases as the
leverage of the firm grows (Jenses & Meckling, 1976). Some previous have found a positive
relationship between leverage and the extent of financial information disclosure (Bradbury,
1992; Malone et al.,1993).Richardson and Welker (2001)argue that social and financial
information disclosures have similar determinants , therefore , a similar relationship is expected
in the case of environmental disclosure. According to Christopher and Filipovic (2008) and Ma
and Zhao (2009) the higher the leverage, the more the company is likely to disclose social
information. Branco and Rodrigues (2008) found out that the relationship between corporate
social responsibility disclosure and leverage may be significant in the case of the internet in
which companies that were highly leveraged did established a closer relationship with their
creditors and adopted alternative means to publish their social responsibility disclosure.
Therefore it is expected that, the higher the financial leverage, the more likely the company
would disclose social and environmental information.
2.1.5 Firm Age
Under the legitimacy theory, companies’ societal existence depends on the acceptance of
the society where they operate. Since the companies can be influenced by, and have influences to
the society, legitimacy is assumed an important resource determining their survival (Deegan,
2002). Therefore, older companies with longer societal existence may have taken relatively more
legitimacy and may have a higher reputation and involvement of social responsibility than
younger companies. As a company operates longer, there will be more communication needed to
the outside community. This provides companies with wide social networks, affecting their
public images (Yang, 2009). Previous studies support the significant association between age of
firm and environmental information disclosure (e. g. Roberts, 1992; Yang, 2009).
2.1.6 Audit Firm Size
It hypothesized that large audit firms are more likely to associate with clients that
disclose a high level of information in their annual reports and websites. The assumption here is
that, in an attempt to keep their clients, due to the lack of economic power, small audit firms try
to meet clients’ demands (Malone et al., 1993). Large audit firms are expected to deal with
multinational companies conducting their business activities over the world. Therefore, their
work is more likely to be influenced by the International Accounting Standards and it is expected
that their clients will provide more level of financial and non-financial information in their
annual reports and websites. Previous studies have examined empirically the relation between
the characteristics of the audit firm and the level of environmental disclosure and found a
positive association between the audit firm size and the level of disclosure. It is believed to be an
important responsibility of auditors to recommend their client companies to practice socially
responsible accounting practices (Choi, 1998). According to legitimacy theory it clearly
recognizes that organizations are bound by the social responsibility in which they agree to
perform various socially desired actions in return for approval of their objectives, which will
guarantees their continued existence and their success (Brown and Deegan, 1998; Deegan, 2002;
Guthrie and Parker, 1989).
2.2 EMPIRICAL FRAMEWORK
Previous empirical studies have shown that social and environmental information
disclosures are varies across companies, industries, and time (Gray et al., 1995, 2001; Hackston
and Milne, 1996).A review of literature from Western and Asia-Pacific regions indicate a low
level of environmental disclosure practices but there has been a considerable increase in the
number of organizations performing environmental accounting and reporting (Gibbon and Joshi,
1999). Haniffa and Cooke (2002) suggest that corporate disclosure practice reflects the
underlying environmental influences that affect company accounting practices in different
countries. Williams et al (1999) used content analysis to investigate corporate social disclosures
from four countries: Australia, Singapore, Malaysia, and Hong Kong through annual reports and
websites. They found that Australian and Singaporean companies provided more social
disclosures on their websites than in annual reports but there were no significant differences in
Malaysia and Hong Kong. Villiers and Staden (2011) also used content analysis to compare
corporate environmental disclosures on websites and in annual reports of 120 North American
firms. They found different levels of environmental disclosures, and companies disclosed more
environmental information on their websites when faced with an environmental crisis and more
in their annual reports when they had a bad environmental reputation. Ortas et al. (2014)
examined the influence of companies’ financial factors on the extent of corporate environmental
sustainability reporting in an impressive sample of 3931 companies operating in 51 industries
and 59 countries. Using a quartile regression they found that, legitimacy theory, agency theory,
political costs theory, and signal theory offers a better understanding of the complex structure of
the dependencies found among factors such as company size, leverage, return on assets, research
and development spending, market return and market capitalization, and commitment to
environmental reporting.
In Thailand Kuasirikun and Sherer (2004) examined the annual reports of 63 Thai firms
in 1993, and 84 in 1999, they found an increase from 44% to 45% in narrative environmental
disclosures. Connelly and Limpaphayon (2004) examined a sample of 120 Thai listed
companies’ annual reports and found a significant positive association between market valuation
and disclosures but not between environmental reporting and corporate accounting performance.
Ratanajongkol et al. (2006) found that environmental disclosure made by the 40 largest Thai
firms in 1997, 1999, and 2001 decreased over the study period. Rahman et al. (2010) found no
relationship between environmental disclosure and financial performance of 27 Thai listed
companies, but Suttipun and Standton (2011) found a relationship between the amount of
disclosure and company size of 75 Thai companies. Suttipun and Stanton (2012) found that 96
percent of the 50 Thai listed companies provided environmental disclosures in their annual
reports and 88 percent on websites. Hassan et al. (2012) concluded that public listed companies
in Malaysia have undertaken significant effort and have acted proactively in utilizing the Internet
as a medium for social responsibility disclosures. This is evident from the fact that only 73%
companies had provided social responsibility information on the Internet.
2.3 THEORETICAL FRAMEWORK
A number of different theories have been used to explain why corporations might
voluntarily disclose social and environmental information to outside parties. According to Gray
et al. (1995) the theories that seem to have been most popular in explaining the content and the
level of social and environmental information disclosures are the legitimacy theory and the
stakeholder theory.
Hooghiemstra (2000) stated that, according to legitimacy and stakeholder theories, social
and environmental disclosure is used in order to guard corporations’ reputation and identity.
However, Guthrie and Parker (1990) stated that, legitimacy theory is one of the most adopted
theories for explaining corporate social and environmental disclosures. Perrow (1970) defines
legitimacy as a generalized perception or assumption that the actions of an entity are desirable,
proper, or appropriate within some socially constructed system of norms, value, beliefs, and
definitions. Legitimacy theory suggests a relationship between corporate social disclosure and
community concerns so that management must react to community expectations and changes.
Corporations continually seek to ensure that their activities are perceived by outside parties as
legitimate. This is because a corporation is part of a broader social system (Deegan,
2002).Legitimacy theory has been used by researchers studying social and environmental
disclosures, and they indicate that corporations legitimize their activities because corporate
management reacts to community expectations (e. g. Patten, 1992, Guthrie and Parker, 1990).
Therefore, legitimacy theory assumes that voluntary corporate social and environmental
disclosures are in response of social, economic and political factors. Many previous studies on
corporate social disclosures have provided evidence that firms do voluntarily disclose
information in their annual reports as a strategy to manage their legitimacy (e. g. Patten, 1991;
Deegan and Rankin, 1996; Woodward et al., 2001).
3.0 METHODOLOGY
3.1 Sample Selection
A cross sectional survey research design was used in this study. With respect to sample
selection, a total of 10 oil and gas companies were selected out of the 17 oil and gas companies
quoted in the Nigerian stock exchange for the period of 4years ranging from 2011 – 2014
3.2 Model Specification
To determine the influence of the five firm characteristics on the level of social and
environmental disclosure the following multiple regression models is adopted and fitted to the
data (Omar, 2014).
Soc Env Dis = β0 + β1 Size + β2 Prof + β3 Fin Lev + β4 Age + β5 Aud F Size + e
Where:
Soc Env Dis= Social and environmental disclosures measured using disclosure compliance
index.
DI = TDI/ED;
Where:
DI = disclosure index;
TDI = Total disclosed index
EDI = expected disclosed index
Where:
Size = Firm size; measured using log of total assets
Prof = Profitability; measured using profit after tax
Fin Lev = Financial Leverage; measured using debt to equity
Age = Firm age; measured using year of incorporation
Aud FSize = Audit firm size; measured using dummy variables, 1 if is a big four, 0 otherwise
e = error term.
3.3 The Level of Social and Environmental Disclosure
The dependent variable in the model is the level of social and environmental information
disclosed in the annual report of the selected oil and gas companies in Nigeria. The level of the
disclosure is measured by word count using a checklist divided into 17 different items adopted
from previous studies by (Wiseman, 1982; Deegan and Gordon, 1996; Hackston and Milne,
1996; and Suttipun and Stanton, 2012; Omar, 2014). The checklist as follows:
1) Environmental policy including lists of environmental objectives, environmental issues of
concern, and prioritization of environmental issues in term of their impacts;
2) Environmental audit;
3) Compliance with standards including benchmarks;
4) Air emissions;
5) Spills;
6) Risk management including environmental impact assessment;
7) Environmental spending and activities;
8) Rehabilitation costs consisting of operating costs, provisions, and contingent liabilities;
9) Sustainable development reporting including a statement that the company subscribes to
the principle of sustainable development, details of the principle, attempts to connect the
environmental and economic dimensions, impact on the biosphere and habitat carrying
capacity, natural trust account, eco-asset sheet, and natural capacity;
10) Education and training;
11) Litigation about environmental issues;
12) Fiscal changes;13) Water effluent;14) Business ethics; 15) Human resources; 16) Production17) Proved reserve;
4.0 DATA PRESENTATION AND ANALYSIS
DESCRIPTIVE STATISTICS
CSED LEV FSIZE PROF F_AGE AUDSIZE
Mean 0.522059 7.208258 7.417027 0.158982 51.97500 0.700000
Median 0.470588 7.557589 7.691941 0.045723 49.50000 1.000000
Maximum 0.882353 8.958946 9.435637 1.842736 134.0000 1.000000
Minimum 0.176471 4.510223 5.262831 -0.474506 6.000000 0.000000
Std. Dev. 0.265145 1.240193 1.203810 0.405591 34.32087 0.464095
Skewness 0.070950 -0.766560 -0.464205 3.065969 1.093621 -0.872872
Kurtosis 1.311367 2.645133 2.427566 12.83827 3.671399 1.761905
Jarque-Bera 4.786027 4.127314 1.982710 223.9870 8.724669 7.634165
Probability 0.041354 0.126989 0.371074 0.000000 0.012749 0.021992
Source: Eviews 8.0
From the result of the descriptive statistics it was observed that corporate social and
environmental disclosure stood at a mean value of 0.522 therefore indicating that 52% of sample
companies engage in disclosure. This is further explained in the minimum and maximum value
respectively. Standard deviation which measures the spread of the distribution stood at a value of
0.26. An examination of the Jarque- Bera statistics stood at a value of 4.7 with associate
probability value of 0.04 which was found to be significant at 5% level therefore indicating that
the variables are normally distributed. An examination of the other explanatory variable was
found to be normally distributed.
REGRESSION RESULT
Dependent Variable: CSEDMethod: Panel EGLS (Cross-section random effects)Sample: 2011 2014Periods included: 4Cross-sections included: 10Total panel (balanced) observations: 40Swamy and Arora estimator of component variancesWhite cross-section standard errors & covariance (d.f. corrected)
Variable Coefficient Std. Error t-Statistic Prob.
LEV 0.014341 0.021878 0.655502 0.5166FSIZE -0.061285 0.035830 -1.710425 0.0963PROF -0.163563 0.014933 -10.95333 0.0000FAGE 0.000523 0.002099 0.249326 0.8046AUDSIZE -0.237179 0.114269 -2.075627 0.0456C 1.038064 0.328142 3.163458 0.0033
Effects SpecificationS.D. Rho
Cross-section random 0.204109 0.9041Idiosyncratic random 0.066486 0.0959
Weighted Statistics
R-squared 0.402688 Mean dependent var 0.083922Adjusted R-squared 0.314848 S.D. dependent var 0.083033S.E. of regression 0.068730 Sum squared resid 0.160608F-statistic 4.584333 Durbin-Watson stat 1.564726Prob(F-statistic) 0.002651
Unweighted Statistics
R-squared 0.377059 Mean dependent var 0.522059Sum squared resid 1.707968 Durbin-Watson stat 0.554001
Source: Eviews 8.0
From the table above it was found out that the coefficient of determination depicted as R2 was
found to have stood at a value of 40% therefore indicating that the model account for 40% of
systematic variation exhibited by the dependent variable while the remaining 60 % left
accounted for is been captured by the stochastic error term. The Fstat with a value of 4.58 with
an associate probability value of 0.00 therefore indicate that the model is jointly statistically
significant. The Durbin Watson statistics with a value of 1.5 therefore indicates that the presence
of first order spatial correlation does not exist in this model.
An examination of the explanatory variables reveals that leverage is positively related with
corporate social and environmental disclosure but not statistically significant when measured at
5% level of significance. Firm size was found to impact negatively on CSR it was also found to
be none statistically significant at 5% levels. Furthermore, Profitability was found to exert a
negative relationship and was also statistically significant at 5% level. Firm age was found to be
positively related with CSR but not statistically significant at 5% level. Audit size was found to
impact negatively on CSR it was also found to be statistically significant at 5% level of
significance.
Summary of Findings
1. Firm size was found to impact negatively on CSR it was also found to be none
statistically significant at 5% levels. Furthermore. This therefore indicates that most large
firms might have the tendency to defer from disclosure holding to the fact that larger
firms can employ variety of standards to reduce their cost.
2. Profitability was found to exert a negative relationship and was also statistically
significant at 5% level. This therefore indicates that profitability of a firm does not have
an impact on the level of disclosure in an organization
3. Firm age was found to be positively related with CSR but not statistically significant at
5% level. This implies that firm age has an impact on the level of disclosure in an
organization therefore implying that the number of years an organization as spent will
determine the level of disclosure of that organization.
4. Leverage is positively related with corporate social and environmental disclosure but not
statistically significant. This means that if a firm incurs debt financing into its
organization it could aid them to disclose due to the fact that the firm want to improve its
profitability so as to meet its debt obligation. It is therefore recommended that firms
should breach equilibrium between its debt financing and disclosure.
5. Audit size was found to impact negatively on CSR it was also found to be statistically
significant at 5% level of significance. This therefore means that the kind of audit service
been carried out does not impact on CSR disclosure
5.0 CONCLUSION AND RECOMMENDATIONS
Corporate social and environmental responsibility is a company’s commitment to operating
in an economically, socially and environmentally sustainable manner whilst balancing the
interests of diverse stakeholders. Corporate social and environmental reporting represents the
private sector’s way of integrating the economic, social, and environmental imperatives of its
activities. Corporate social and environmental reporting has attracted much attention over the
past three decades. However, Managers tend to weigh the benefits and costs of disclosing
environmental information. The study provides insight into the determinants of corporate social
reporting decision.
The study recommends the following; Firstly, there is a need for corporate entities to
improve their environmental responsibility practices and disclose comprehensively their
environmental risks, liabilities and impact on the environment. The voluntary stance of
environmental reporting has often be used as a cliché for companies to under report their effect
on the environment and this is responsible for the negligence of several corporate entities with
regards to environmental reporting. We suggest that incentives be put in place to motivate
disclosures. For example in several developed economies, environmental disclosures have been
listed as part of the requirements for listing on the stock exchange.
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APPENDICES
APPENDIX 1: REGRESSION RESULT
Dependent Variable: CSEDMethod: Panel EGLS (Cross-section random effects)Sample: 2011 2014Periods included: 4Cross-sections included: 10Total panel (balanced) observations: 40Swamy and Arora estimator of component variancesWhite cross-section standard errors & covariance (d.f. corrected)
Variable Coefficient Std. Error t-Statistic Prob.
LEV 0.014341 0.021878 0.655502 0.5166FSIZE -0.061285 0.035830 -1.710425 0.0963PROF -0.163563 0.014933 -10.95333 0.0000FAGE 0.000523 0.002099 0.249326 0.8046AUDSIZE -0.237179 0.114269 -2.075627 0.0456C 1.038064 0.328142 3.163458 0.0033
Effects SpecificationS.D. Rho
Cross-section random 0.204109 0.9041Idiosyncratic random 0.066486 0.0959
Weighted Statistics
R-squared 0.402688 Mean dependent var 0.083922Adjusted R-squared 0.314848 S.D. dependent var 0.083033S.E. of regression 0.068730 Sum squared resid 0.160608F-statistic 4.584333 Durbin-Watson stat 1.564726Prob(F-statistic) 0.002651
Unweighted Statistics
R-squared 0.377059 Mean dependent var 0.522059Sum squared resid 1.707968 Durbin-Watson stat 0.554001
APPENDIX 2: DESCRIPTIVE STATISTICS
CSED LEV FSIZE PROF F_AGE AUDSIZE Mean 0.522059 7.208258 7.417027 0.158982 51.97500 0.700000 Median 0.470588 7.557589 7.691941 0.045723 49.50000 1.000000 Maximum 0.882353 8.958946 9.435637 1.842736 134.0000 1.000000 Minimum 0.176471 4.510223 5.262831 -0.474506 6.000000 0.000000 Std. Dev. 0.265145 1.240193 1.203810 0.405591 34.32087 0.464095 Skewness 0.070950 -0.766560 -0.464205 3.065969 1.093621 -0.872872 Kurtosis 1.311367 2.645133 2.427566 12.83827 3.671399 1.761905
Jarque-Bera 4.786027 4.127314 1.982710 223.9870 8.724669 7.634165
Probability 0.041354 0.126989 0.371074 0.000000 0.012749 0.021992
Sum 20.88235 288.3303 296.6811 6.359296 2079.000 28.00000 Sum Sq. Dev. 2.741782 59.98504 56.51718 6.415664 45938.98 8.400000
Observations 40 40 40 40 40 40
APPENDIX 4: DATA
S/N COMPANY YEAR INDEX Total debtProfit aft tax Total asset F AGE AUD F SIZE
1 Chevron 20110.88235
3 87293 27008 209474 131 1
20120.88235
3 95150 26336 232982 132 1
20130.88235
3 103326 21597 253753 133 1
20140.88235
3 109835 19241 266026 134 1
2 Conoil 20110.23529
4 45174121 2997314 61855315 84 1
20120.29411
8 67434680 714981 83095975 85 1
20130.29411
8 64334592 3070091 82372026 86 1
20140.17647
1 77794689 1427029 94483345 87 1
3 Capital oil 20110.70588
240054125
9 -53532380225019412
8 10 0
20120.70588
270086711
6 -23040037272669649
6 11 0
APPENDIX 3: HAUSMAN TESTCorrelated Random Effects - Hausman TestEquation: UntitledTest cross-section random effects
Test SummaryChi-Sq. Statistic Chi-Sq. d.f. Prob.
Cross-section random 1.326642 4 0.0768
Source: Eviews 8.0
20130.70588
290979930
147553010
7186009857
4 12 0
20140.70588
287749593
713116136
7169970759
3 13 0
4 Eland oil 20110.76470
6 26476000 -17509 1926800 29 1
20120.82352
9 1210241 -14189 201494 30 1
20130.82352
9 32376 -26142 183160 31 1
20140.82352
9 50787 16297 220053 32 1
5 Forte oil 20110.82352
9 32843551 -15584459 32843551 47 0
20120.82352
9 34930096 654461 42512938 48 0
20130.82352
9 52976418 6524550 22112822 49 0
20140.82352
9 81607265 6006298 23299680 50 0
6 Lekoil 20110.23529
4 1443453 3839193 2329268 20 0
20120.35294
1 1479836 3839193 169712678 21 0
20130.41176
5 2262317211811219
9 176524247 22 0
20140.35294
1 2758185 11932438 176524247 23 0
7 Mobil 20110.23529
4 17033000 4082060 16251870 24 1
20120.23529
4 12332491 2878299 33663722 59 1
20130.47058
8 14380876 3480785 40728522 60 1
20140.47058
8 35677125 6392790 49228575 6 1
8 MRS 20110.29411
8 53711553 615624 72700238 62 1
20120.17647
1 36541678 205121 55595688 43 1
20130.17647
1 46065479 192420 65694626 44 1
20140.17647
1 42186995 315430 62131572 45 1
9 Oando 20110.23529
430843698
0 2482612 58270806 50 1
20120.29411
816986462
2 4379446 227319476 51 1
20130.29411
842952886
2 2350574 591896939 52 1
20140.29411
842874346
2 4532564 342356321 53 1
10 Shell 20110.29411
8 40884199 90600000 49166036 51 1
20120.70588
2 39131184 1934902 45009322 52 1
20130.64705
9 33373399 1061161 4479161 53 1
20140.64705
9 900566 1188768 2811090 54 1