Community engagement, health and safety costs and financial performance of listed natural resource and downstream oil and gas firms in nigeria

Abstract

This study examined the effect of community engagement and health and safety costs on the financial performance of listed natural resource and downstream oil and gas firms in Nigeria for the period spanning 2012 to 2024. Financial performance was measured using return on assets (ROA). Community engagement was proxied by corporate social responsibility (CSR) expenditure, while health and safety costs (HSE) captured the environmental disaster dimension. Firm age served as the control variable. Data were sourced from the annual reports and financial statements of thirteen firms listed on the Nigerian Exchange Group. The study adopted the ex post facto research design and employed the census sampling technique. Analytical tools included descriptive statistics, correlation analysis, variance inflation factor tests, the Hausman specification test, the likelihood ratio test, and fixed effect regression. Findings revealed that community engagement did not exert a statistically significant effect on return on assets, with a coefficient of −0.0015 and a probability value of 0.4332. Similarly, health and safety costs showed no significant individual effect on return on assets, recording a coefficient of −0.0216 and a probability value of 0.1787. However, the overall model was jointly significant, as indicated by an F statistic of 7.94 and a probability value of 0.0000, with an R squared of 0.4615. The study concluded that although community engagement and health and safety costs did not individually influence financial performance in a statistically significant manner, their combined effects were meaningful. Firms are therefore encouraged to adopt integrated strategies that align community engagement initiatives with health and safety management practices to foster long term financial sustainability.