Background: Corporate performance is an indicator of the extent to which directors or managers of companies are carrying out their fiduciary duties of maximizing shareholders’ wealth while also engaging in other social activities. The global focus has now shifted to corporate social responsibility (CSR) practices, as the economic activities of corporate institutions significantly impact society and the environment.
Purpose: The aim of this study is to determine how corporate
social responsibility (CSR) practices can influence the corporate performances
of listed firms in the industrial goods producing sector of Nigeria and other
developing countries.
Theoretical Framework: The enhancement of corporate value by CSR
practices has become an interesting area of study for corporate managers and
policymakers globally. The Stakeholder and Business Ethics theories were used
for this study. However, it was primarily grounded in the Stakeholder Theory,
proposed by Edward Freeman in 1984, to evaluate the influence of CSR on
corporate value.
Methodology: The study uses the causal comparative research design
and we purposively select a sample of four industrial goods firms from
Nigeria’s listed manufacturing enterprises as of 31st December 2021
based on their social responsibility relationships with society, employees and
creditors. Nineteen years of secondary data were collected from the website of
the Nigerian Exchange Group and the yearly financial reports of industrial
goods-producing enterprises. These data have been analysed using the ordinary
least squares panel data regression, fixed and random effects models,
stationarity test, cross-section dependence test the Hausman test.
Findings: The results show that corporate giving, employee welfare
packages and creditor days have significant positive effects on return on
assets (a proxy of corporate performance) suggesting that the threat to
profit-maximization is not caused by CSR but by illegitimate use of CSR by
rent-seeking corporate managers.
Implications of this Research: The study helps in filling the gap
in the literature and serves as a basis for the economic and social development
of Nigeria, developed and other developing countries through a more legitimate
CSR investment in corporate giving, employee welfare package and creditor
settlement days. Moreover, this research established factors that may influence
the corporate performances of Nigeria’s industrial goods-producing firms. The
researchers used the outcomes of this research to conclude that CSR investments
in corporate giving, employees’ welfare and settlement of creditors have
significantly improved the corporate performances of listed industrial
goods-producing firms in Nigeria.
Value: The value of the study is that evidence of CSR success in
the industrial goods manufacturing sector has for the first time been
established using a time scope of 19 years and a firm-year-observations of 228. This
study supports the claim that CSR is not a threat to profit maximization since
it has a strong relationship with corporate value.
Author
(s) Details
William
Smart Inyang
epartment of Accounting, University of Calabar, Cross River State,
Nigeria.
Efiong
Eme Joel
Department of Accounting, University of Calabar, Cross River
State, Nigeria.
Ije
Ubana Ubi
Department of Business Management, University of Calabar, Cross
River State, Nigeria.
Eyo
Itam Eyo
Department of Banking and Finance, University of Calabar, Cross
River State, Nigeria.
Oboh
John Ogenyi
Department of Accounting, University of Calabar, Cross River
State, Nigeria.
Inyang
Ochi Inyang
Department of Accounting, University of Calabar, Cross River
State, Nigeria.
Please see the book here:- https://doi.org/10.9734/bpi/nabme/v4/3987
