Corporate social responsibility and financial performance: evidence from Nigeria

More than ever in the economic history of Nigeria, there is a greater need for good corporate social responsibility. The present crises are too many to attempt to exhaust in this article: gender inequality, lack of sufficient art and culture education, poor communities, low donations and gifts, poor health and safety, customers’ complaints, data protection and privacy issues, poor human rights, low impact assessment, poor product quality, etc. There is a general acceptance of the need for corporations to intervene in providing essential services that can help people. However, the big question is what is in it for these corporations? In this paper, efforts are made to determine this and many more questions. The research design is correlational with a population and sample of 156 and 112, respectively. Four filters were applied: corporations listed with the Nigerian Exchange Group as at the end of 2021 were considered; companies without complete 10 years annual reports were excluded, corporations that were quoted after 2021 were excluded and firms with technical difficulties with the Exchange as indicated on its website were excluded. The total quoted corporations that were used was 112 for a period of 10 years which produces 1,120 observations. The dependent variable which proxy financial performance was an index derived from return on assets, earnings per share and return on equity. The independent variable: corporate social responsibility is treated as an index derived from human resource, environmental activities, community donations, gifts and new product research and development. In the case of control variables, we employ firm size and leverage. Following the results of the model, p-values, t-values, R2 , Prob > F value, we report that corporate social responsibility is positively and significantly related to corporate financial performance. We drop leverage in favour of firm size because of the model specification error test results, though it is negatively insignificant