THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON FIRMS’ PROFITABILITY IN NIGERIA: A STUDY OF SELECTED QUOTED FIRMS FROM 2003 – 2012
Keywords:
Corporate Social Responsibility, Firms’ Profitability, Nigerian Stock Exchange, NigeriaAbstract
This study examined the impact of corporate social responsibility (CSR) on firms’ profitability among the selected quoted Nigerian firms between 2003 and 2012. This study relied on secondary sources of data. The data were extracted from the Nigerian Stock Exchange Fact Books, annual reports and financial statements of the selected firms. A total of one hundred and ten non-financial firms on the Nigerian Stock Exchange were selected and a sample size of eighty-six firms was chosen, using the Burley’s formula propounded by Yamane. The selection of firms was based on two-sampling procedure. The data collected were analyzed using E-views statistical package. The study revealed that a significant and negative relationship exists between CSR and profitability of the selected quoted firms during the period under review. From our investigation, the Nigeria corporate organization identified with the shareholder theory. This implied that Nigeria corporate organizations may not embark on CSR activities if it will not affect or influence their economic interests positively or maximally. It is believed that the sole consistency of business management is the shareholders and the sole concern of shareholders is profit maximization. Any activity is justified if it increases the value of the firm to its shareholders and is not justified if the value of the firm is reduced. A wide-range and multi-tiered awareness campaign needs to be organized in order to make the various stakeholders and businesses understand the necessity and advantages of CSR and remove any misconceptions related to it.
References
Adediran, S.A., & Okoye, F.A. (2011). The Impact of Corporate Social Responsibility on Corporate Performance in Nigeria. The Certified National Accountant: A Quarterly Journal of Association of National Accountants of Nigeria, 19(3), July – September.
Amaeshi, K. M., Adi, B. C., Ogbechie, C., & Amao, O. O (2006). Corporate Social Responsibility in Nigeria: Western Mimicry or Indigenous Influences? Journal of Corporate Citizenship, 24, 83 – 99.
Aupperle, K. E., Carroll, A. B., & Hatfield, J. D. (1985). An Empirical Examination of the Relationship Between Corporate Social Relationship and Profitability. Academy of Management Journal, 28(2), 446-463.
Berle, A. A. & Means, G. C. (1932). The Modern Corporation and Private Property. New York: Macmillan.
Carroll, A. B. (1979). A Three-Dimensional Conceptual Model of Corporate Social Performance. Academy of Management Review, 4(4), 497 – 506.
Cochran, P. (1994). The Toronto Conference: Reflections of Stakeholder Theory. Business and Society, 33(1), 95-98.
Davenport, K. (2000). Corporate Citizenship: A Stakeholder Approach for Defining Corporate Social performance and Identifying Measures for Assessing It. Business and Society, 39(2), 210-219.
Friedman, M. (1962). Capitalism and Freedom. Chicago: University of Chicago Press.
Garone, S. (1999). The Link Between Corporate Citizenship and financial Performance, report No. R-1234-99-RR, The Conference Board. Available at: http://www.conference-board.org/publications/publicationdetail.cfm?publicationid (Retrieved 29-01-2011).
Gowon, Y. (2007). Governance Challenges in Crisis and Post-Conflict Countries.United Nations 7th Global Forum, Vienna, Austria.
Guobadia, G. A. (2000). Protecting Minority and Public Interests in Nigeria Company Law: The Corporate Affairs Commission as a Corporations Ombudsman, in F. McMillan (ed). International Company Law Annual, Vol. 1, Oxford-Portland, Oregon: Hart Publishing.
Kretzman, S. (1995). Nigeria’s Drilling Fields’: Shell Oil’s Role in Repression. Multinationals Monitor, 16:1-2.
Lee, M. P. (2008). A Review of the Theories of Corporate Social Responsibility: Its Evolutionary Path and the Road Ahead. International Journal of Management Reviews, 10(1): 53-73
Lewis, S. (2003) Reputation and Corporate Responsibility. Journal of Communication Management, 7(4), 356-364.
Mahoney, L., & Roberts, R. W. (2007). Corporate Social Performance and Financial Performance and Institutional Ownership in Canadian Firms. Accounting Forum, 31, 233-253.
McGuire, J. B. (1963) Business and Society. New York: McGraw-Hill.
Meehan, J., Meehan, K, & Richards, A. (2006). Corporate Social Responsibility: The 3CSR Model, International Journal of Social Economics, 33(5-6), 386-398.
Minga, N. (2010). International Financial Reporting Standards and Environmental Accounting. Working Papers Series. Retrieved on April 28, 2010 from http://ssrn.com/abstract.
Ngwakwe, C. C. (2009). Environmental Responsibility and Firm Performance: Evidence from Nigeria. International Journal of Humanities and Social Sciences, 3, 2-22.
Osemene, O. F. (2012). Corporate Social Responsibility Practices in Mobile Telecommunications Industry in Nigeria. European Journal of Business and Management, 4(8), 149-157.
Visser, A. (2006). Social and Environmental Responsibility in Small and Medium Enterprises in Latin America. Journal of Corporate Citizenship, 21, Spring: 39-50.
Wright, P., & Ferris, S. P. (1997). Agency Conflict and Corporate Strategy: Effect of Divestment on Corporate Value. Strategic Management Journal, 18 (1), 77-83.
Uwalomwa, U. (2011). An Empirical Investigation of the Association Between Firms’ Characteristics and Corporate Social Disclosures in the Nigerian Financial Sector. Journal of Sustainable Development in Africa, Vol. 13, No. 1.
Yamane, Y. (1973). Statistics: An Introductory Analysis. 3rded. New York: Harper Row Publishers Inc.
