DETERMINANTS AND VALUE RELEVANCE OF ISO 14001 ADOPTION OF LISTED MANUFACTURING FIRMS IN NIGERIA

The study aims to examine the association between Environmental Management System (EMS) and the value it adds to firms. Specifically, it focuses on the effect of International Standard Organization (ISO) 14001 and the value of listed firms in Nigeria. Furthermore, the characteristics of the firms that are found engaging in such practices in terms of size and age were investigated. An ex-post facto design was adopted and secondary data were sourced from the annual reports and accounts of firms that are listed on the Nigerian Exchange Limited. Twenty-one (21) firms made up the population for the study and out of which twelve (12) firms were purposely selected as the sample of the study from the period 2012-2022. In the final analysis, only firms that have complete data for the sampled period were included in the study. The study employed a multiple regression model for the analysis. The result shows that ISO 14001 adoption has no significant impact on firm value. Furthermore, both firm size and firm age have significant effect on the level of ISO 14001 adoption, with firm size having a positive effect while the effect of firm age is negative. Given the benefits that accrue from firm’s adoption of sound environmental management practice in terms of sustainability, the study recommends that organizations can boost their market value by applying ISO 14001 standards, and this will happen through improved corporate reputation, regulatory compliance, and environmental performance. The finding that the implementation of ISO 14001 is heavily reliant on the size of the organization informed the recommendation that industry associations and regulatory agencies should use awareness campaign and financial incentives to encourage smaller enterprises to adopt ISO 14001 standards. This is because of the benefits it provides.