ABSTRACT

This study examined the effect of corporate social responsibility costs on financial performance of listed companies in Nigeria. The study made use of ex-post facto research design and the data collected from secondary sources were analysed using the ordinary least square technique. The panel regression estimation was employed. The results revealed that corporate social responsibility cost (corporate social responsibility donation) has a significant effect on return on equity, return on asset and tubin Q after controlling for firm size and age. The study concludes that corporate social responsibility cost significantly affects the performance of listed companies in Nigeria. It is recommended that corporate entities in Nigeria should invest in CSR activities in its entire ramification in order to boost their image/reputation thereby increasing their returns. Additionally, government needs to adopt a measure that monitors corporate organizations fair investment in social responsibility so as to discourage some management who records high costs on their financial report for CSR to evade tax and without giving anything back to the society. Corporate entities needs to adopt a measure that monitors corporate organizations fair investment in social responsibility so as to discourage some management who records high costs on their financial report for CSR against net profit to evade tax and without giving anything back to the society.

TABLE OF CONTENTS

Title Page                                                                                                                                i

Declaration                                                                                                                              ii

Certification                                                                                                                            iii

Dedication                                                                                                                              iv

Acknowledgements                                                                                                                v

Table of Contents                                                                                                                   vi

List of Tables                                                                                                                          vii

Abstract                                                                                                                                  viii

CHAPTER 1: INTRODUCTION

1.1       Background to the Study                                                                                           1

1.2        Statement of the Problem                                                                                           4

1.3        Objectives of the Study                                                                                              5

1.4        Research Questions                                                                                                     5

1.5        Hypotheses of the Study                                                                                            6

1.6      Scope/Limitation of the Study                                                                                    6

1.7              Significance of the study                                                                                            6

1.8              Operational definition of terms                                                                                  8

CHAPTER 2: REVIEW OF RELATED LITERATURE

2.1       Conceptual Framework                                                                                               9

2.1.1        Concept of corporate social responsibility                                                                  9

2.1.2    Historical origin of corporate social responsibility                                                      14

2.1.3    Corporate social responsibility development in Nigeria                                             15

2.1.4.  The Scope of corporate social responsibility                                                               18

2.1.5    Characteristics of corporate social responsibility                                                        19

2.1.6    Responsibilities of corporate social responsibility                                                      20

2.1.6.1 Responsibilities towards firm itself                                                                21

2.1.6.2 Social responsibility towards employees                                                        23

2.1.6.3 Social responsibility towards shareholders                                                                 23

2.1.6.4  Social responsibility towards customers                                                                    24

2.1..6.5 Social responsibility towards environment                                                                24

 2.1.7    The effects of implementing Corporate Social Responsibility                                  25    

2.1.8     Corporate social responsibility and sustainability development

            in Nigerian firms                                                                                                         27

2.1.9     Corporate social Responsibility and accounting information discourse                    30

2.1.10     Determinates of corporate social responsibility                                                         31

2.1.10.1Financial performance and economic environment                                                   31

2.1.10.2Competition                                                                                                               32

2.1.10.3 Legal environment                                                                                                    32

2.1.10.4 Private regulation and the presence of independent organization                            33

2.1.10.5 Business Education environment                                                                              34

2.1.10.6  Employer-employee relations                                                                                   34

2.1.11 Economic Drivers of corporate social responsibility                                                   34

2.1.12 Measurements of corporate social responsibility and corporate

            financial performance                                                                                                 37

2.1.12.1 Measurement of corporate social responsibility and cooperate (CSR)                     37

2.1.12.2 KLD Index (Kinder, Lydenberg, Domini)                                                               38

2.1.12.3   Corporate social performance Disclosure                                                               38

2.1.12.4  Reputational indices                                                                                                39

2.1.12.5 Social audit or corporate responsibility index (CRI)                                                39

2.1.12.6 Measurement of corporate financial performance (CFP)                                          39

2.2       Theoretical Framework                                                                                               40

2.2.1    Agency theory                                                                                                            40

2.2.2    Stakeholder theory                                                                                                      41

2.2.4    Legitimate theory                                                                                                        43

2.3       Empirical Review                                                                                                        43

2.4       Summary of Empirical Review                                                                                   74

CHAPTER 3: RESEARCH METHODOLOGY

3.1       Research Design                                                                                                         79

3.2       Population of the Study                                                                                              79

3.3       Sample and Sampling Technique                                                                                79

3.4       Data Sources                                                                                                               80

3.5       Model Specification                                                                                                    80

3.6       Techniques of Data Treatment                                                                                    82

CHAPTER 4: DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS

4.1       Data Presentation                                                                                                        83

4.2       Data analysis                                                                                                               83

4.2.1    Descriptive statistics                                                                                                   83

4.2.2    Correlation analysis                                                                                                     85

4.2.3    Unit root test                                                                                                               86

4.2.3.1  Panel unit root test for department and independent variables                                 86

4.2.4    Co-integration test                                                                                                      88

4.2.4.1 Co-integration test for the series RESTOE FSIZE FAGE and LCSRD                   88

4.2.4.2 Co-integration test for series RESTOE FSIZE FAGE and LCSRD                         89

4.2.4.3 Co-integration test for series TUBINQ FSIZE FAGE and LCSRD                         89

4.2.5 Test of constant variance (Heteroskedasticity)                                                              90

4.2.5.1 Test of constant variance for Model 1                                                                        90

4.2.5.2 Test of constant variance for Model 2                                                                        91

4.2.5.3  Test of constant variance for Model 3                                                                       91

4.3       Test of constant variance for Model 3                                                                        91

4.4  Discussion of Findings                                                                                                    94

CHAPTER 5: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1       Summary of Findings                                                                                                 96

5.2       Conclusion                                                                                                                  96

5.3       Recommendation                                                                                                        97

5.4       Contribution to knowledge                                                                                         97

5.5       Suggestion for Further Studies                                                                                   97

            References                                                                                                                  98

Appendixes                                                                                                                 106

LIST OF TABLES

Table 2.1: Summary of empirical review                                                                                73

Table 3.1: Summary of independent and dependent variables                                               80

Table 4.2: Descriptive statistics                                                                                              83

Table 4.3: Correlation retoe tobinq fsize fage lcsrd (obs = 720)                                             84

Table 4.4: Result of panel unit root test for the variables                                                       86

Table 4.5: Cointegration test- Engle Granger                                                                         87

Table 4.6: Cointegration test- Engle Granger                                                                         88

Table 4.7: Cointegration test- Engle Granger                                                                         88

Table 4.8: Model 1 Heteroskedasticity test: white                                                                 89

Table 4.4.2: Heteroskedasticity test: White                                                                            89

Table 4.4.3: Heteroskedasticity test: White                                                                            90