Publisher: Centre For Social Science Research Enugu

Corporate Social Responsibility and Corporate Financial Performance In Developing Economies: The Nigerian Experience

Osemwegie, Ero Omeghie Joy, Eneh Onyinye
KEYWORDS: Corporate, Financial performance, responsibility

ABSTRACT:

The objective of the study is to examine the relationship between corporate social responsibility and corporate financial performance. The simple random sampling technique was used to select a sample of thirty five (35) companies for the period 2009-2014. The data was retrieved from corporate annual reports of the sampled companies. In this study, the descriptive statistical methods, the Ordinary Least Square (OLS) and the Two Stage Least Squares regression analysis were used in the estimation of the models and in the determination of the causal relationship between the variables. Using the robust estimates generated by the 2SLS which addresses the challenge of simultaneity bias modelling corporate social responsibility (CSR) as a function of corporate financial performance (CFP). CFP is positive and also statistically significant. On the contrary, when CFP is modelled as a function of CSR and using the robust 2SLS, CSR is positive though not statistically significant. From the evaluation of the results, it appears that causality runs from CFP to CSR and not the reverse. This implies that the profitability of a firm has a positive and significant effect on the extent of its CSR disclosures and more profitable companies could result in more CSR activities. The study recommends that companies may need to be involved in more CSR activities



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