Integrated Reporting and Firm Value in the Nigerian and South African Oil and Gas Sector

Abstract

This paper evaluates the effect of integrated reporting on the firm value of oil and gas companies comparing the two biggest economies in Africa from 2015 to 2018. The study used Tobin’s Q ratio as a proxy to firm value, while integrated reporting was broken down into five capitals of integrated reporting: intellectual capital, human capital, natural capital, social/responsibility capital, and financial capital. Preliminary analyses were conducted, such as descriptive statistics and correlation matrix. In analyzing the data, the study adopted the panel multiple regression method to identify the possible effect of integrated reporting on the firm value of oil and gas companies in Nigeria and South Africa using the Hausman test to choose between fixed and random effects. The result shows that integrated reporting has a significant positive effect on firm values in South Africa and Nigeria. We, therefore, recommend that integrated reporting in Nigeria should be used as a mandatory reporting system because this will encourage stakeholder understanding, instead of trying to source sustainability reports after examining financial statements.

Keywords

• Tobin's Q
• Intellectual Capital
• Human Capital
• Natural Capital
• Social/Responsibility Capital
• Financial Capital