Financial indicators of corporate social responsibility in Nigeria: a binary choice analysis

Abstract

Using multivariate binary choice models, this study investigates the effect of financial indicators on the practice of corporate social responsibility (CSR) in Nigeria. The indicators include return on equity, asset size, and revenue growth. Results of both linear probability and logistic models show that return on equity and asset size increase the likelihood of CSR practice. Sales growth has a negative effect. Compared to other metrics, firms with a large asset investment exhibit the highest likelihood of investing in CSR. Non-parametric tests confirm the positive linkage between CSR and asset size. These findings suggest that large firms, irrespective of their financial conditions, are more likely than other firms to invest in social initiatives. An implication for civil society might be to employ moral suasion to encourage financially strong firms, irrespective of size, to embrace CSR as an important means to boost their public image and long run performance.

Moderating Role of Negative Earnings on Firm Size and Corporate Social Responsibility Relationship: Evidence from Listed Firms on Nigeria Stock Exchange

“…The finding contradicts the view of Chih et al (2008). Obi and Ode-Ichakpa (2020) suggest that large firms, irrespective of their financial conditions, are more likely than other firms to invest in social initiatives. In other words, in firms with higher negative earnings, firm size is negatively related to engagement in SORDI.…”

Corporate Social Responsibility and Financial Performance among Energy Sector Companies

“…A way to encourage companies with a high ROA to adopt CSR as their primary means of improving their public image and long-term performance may be through society's use of moral persuasion. This means to motivate companies to implement quality-of-life practices in the community in which they conduct business to contribute to that community's educational, social, and economic development [68].…”

Effect of Formal Education on Poverty Reduction in Nigeria

“…Human beings are the active agents who accumulate capital, exploit natural resources, and build social, economic, and political organizations, thus driving national development (God'stime, Uchechi, 2014). Numerous theoretical and empirical studies have shown a positive correlation between human capital development and economic growth (Awoyemi et al, 2016; God'stime, Uchechi, 2014; Obi P., Obi K., 2014;Nwadiani, 2018). Despite Nigeria's strong economic growth, poverty rates have continued to rise, with a significant proportion of the population living below the poverty line (Daniel cited in Omoniyi, 2018).…”