ABSTRACT
This study evaluates
the relationship between corporate social responsibility disclosure practice
and financial performance of listed s companies in Nigeria, with the use of
secondary data. The secondary data was sourced from sampled companies’ annual
account and reports between 20072016.The data generated were analyzed using
descriptive, multivariate regression, Correlation and disclosure index. The
major finding from the analysis reveals that there was a positive relationship
between CSRD and financial performance, in the light of the major findings it
was concluded that, CSRD brings about improvement in the financial performance
of the sampled s in Nigeria since they maintain a positive relationship.
CHAPTER 1
INTRODUCTION
1.1 Background to study
Corporate social
responsibility (CSR) has become a strategic agenda for businesses in many
countries. In recent times, businesses in developed countries have started
disclosing their social, environmental, community involvement, professional development
of employees and other CSR-related information in annual financial reports.
There is a considerable growth in the number of companies which have disclosed social
responsibility activities (Guthrie and Parker, 1989; Gray et al,, 1995a). For example,
KPMG (2011) reveals that 62% of 378 global companies surveyed in
October 2010 have a
corporate social responsibility strategy and claim this is an increase of over
50% since 2008 (p. 13). In addition, KPMG (2011) also suggests that companies
that have engaged in CSR will gain an opportunity to obtain competitive benefits,
drive innovation, improve financial performance and create genuine bottom line
outcomes.
There exist a large
number of studies on the disclosures of CSR in financial reports using various
dimensions, countries and markets (Guthrie and Parker, 1989; Deegan and Gordon,
1996; Mathews, 1997; O'Dwyer, 2001; Deegan et al,, 2002; Murphy and Abeysekera,
2008; Clarkson et al,, 2011). Some studies also have evaluated the empirical
relationship between corporate social responsibility disclosures and financial
performance (Griffin and Mahon, 1997; McWilliams and Siegel, 2000; Chen and
Wang, 2011). However, the results of these studies have often been conflicting
and mixed. Some studies have argued that there is a positive association
between financial performance and corporate social responsibility practices
(Waddock and Graves, 1997; Van de Velde et al,, 2005; Peters and Mullen, 2009;
Choi et al,, 2010; Kwanbo, 2011; Michelon, 2011; Oeyono et al,, 2011). Onthe
other hand, several studies also found a negative correlation (Mittal et al,,
2008; Crisóstomo et al,, 2011) as well as neutral relationships (Preston and
O'Bannon, 1997; McWilliams and Siegel, 2000; Moneva and Ortas, 2008; Kimbro
andMelendy, 2010) between CSR disclosures and financial performance.
The relationship between
CSR disclosures and financial performance is examined in this study in a number
of ways. First, this study explores the extent of current corporate social
responsibility (CSR) disclosure of listed companies in an emerging country,
namely, Nigeria. Second, it evaluates the determinants of corporate social
responsibility practices of Nigeria listed companies in a number of industries.
Third, the study examines the relationship between the level of CSR disclosure and financial
performance.
1.2 Research Problem
Businesses are often aware
of, and concerned about, the impact of their activities on the environment,
communities, employees and other relevant stakeholders. Numerous Nigeria companies
have realised the potential benefits of being involved in CSR activities. Many
companies in Nigeria have adopted disclosure guidelines for their businesses in
order to report their CSR activities (Kuasirikun and Sherer, 2004;
Ratanajongkol et al,, 2006). However, Nigeria businesses continue to face
significant challenges in participating in CSR activities (in terms of social
marketing activities, community development or public relations) and the level
of understanding of CSR is still not very high (Prayukvong and Olsen,2009).
Despite these challenges, some prior research has evaluated the disclosure practices
of corporate social responsibility in Nigeria (Kuasirikun and Sherer, 2004; Ratanajongkol
et al,, 2006; Sastararuji and Wottrich, 2008; Prayukvong and Olsen, 2009;
Rajanakorn, 2012; Suttipun and Stanton, 2012).
This study intends to evaluate
the extent of disclosure of CSR practices amongst Nigeria public
companies. It will also examine the interactions between CSR disclosure levels and
financial performance. This is undertaken using data collected from the annual reports
of companies listed on the Nigerian stock exchange .
This study is found to
be justified on a number of reasons. Firstly, most of the prior studies on CSR
disclosures have focused on corporations in developed countries, including,
Australia (Deegan et al,, 2000; Tilt, 2001; Deegan et al,, 2002; 2 Cowan and Gadenne, 2005;
Cuganesan et al,, 2007; Guthrie and Farneti, 2008), Canada (Zeghal and
Ahmed, 1990; Magness, 2006), USA (Meek et al,, 1995; Darus et al,, 2009; Saida,
2009) and Europe (Gray et al,, 1995a; Stittle et al,, 1997; Cormier and Magnan, 2003;
Dragomir, 2010). There exists a limited number of studies on CSR being carried out
using the context of developing countries (Simpson and Kohers,
2002; Hossain et al,, 2006; Chang, 2010; Khan et al,, 2010; Rashid et al,, 2010). In particular,
studies on CSR disclosure and its relationship with financial performance research in Nigeria
are still limited in number. The empirical results from this study may be
different from those of other developing countries. This could be due to differences
in CSR practices between Nigeria and other developing economies. Such
differences may occur due to variations in the definitions of CSR, cultural issues, laws
and regulations.
Secondly, using the
context of Nigeria, a few extant studies were conducted in the early 2000s when
CSR disclosure was not a common practice e.g. Connelly and Limpaphayom (2004),
Kuasirikun and Sherer (2004) and Ratanajongkol et al, (2006). Although the
promotion of CSR practices among Nigeria listed companies has evolved since the
1990s (Foran, 2001), the development of CSR was in fact intensified in 2006 and
culminated in the establishment of the Corporate Social Responsibility
Institute (CSRI) in 2007 by the Nigerian stock exchange. Even though Nigeria companies
have adopted several CSR frameworks, such efforts have limitations due to the
voluntary nature of disclosures (Kuasirikun and Sherer, 2004). Thirdly, a
number of studies have also focused on specific industries but with an
involvement of using small sample size. For example, Ratanajongkol et al,
(2006) examined CSR disclosure of 50 Ghanian listed companies between 1997 and
2001. In another study, Suttipun and Stanton (2012) examined the determinant of
environmental disclosure of 75 listed companies. In addition, Janamrung and
Issarawornrawanich (2013) evaluated the relationship between CSR and financial
performance of companies in industrial products and resources industries.
Furthermore, Henderson (2007) and Wuncharoen (2013) evaluated CSR disclosure in
the hotel industry in Nigeria. Sastararuji and Wottrich (2008) explore CSR
disclosure in the construction industry.
Finally, it is also
apparent that a number of Nigeria studies on CSR in the post global financial
crisis period (i.e. year 2008 and onwards) is fairly limited as well (cf.,Eua-anant
et al,, 2011; Suttipun and Stanton, 2012c; Janamrung and Issarawornrawanich,
2013; Wuncharoen, 2013). Nevertheless, the global financialcrisis is likely to
have an influence on companies investment in CSR activities. For example, Pongpattananon and Tansuwanarat
(2011) has argued that the impact of the financial crisis was widespread in Nigeria.
In addition, Chandoevwit (2010) has documented that the
global crisis had a short-term impact on economic growth in the Nigeria manufacturing
industry.
Based on the above
research gaps in CSR studies in Nigeria, seeks to examine the effect
of firm performance
on CSR disclosure in Nigeria from the perspective of firm performance. We focus
on Nigerian companies due to the circumstance that a country of origin may be
an important determinant of the level of CSR disclosure . Whereas many studies
have focused on the variation in CSR disclosure across developed nations only a few have addressed this issue in
developing countries [20,3] and.
1.3 Research Questions
The primary research
questions for this study are as follows:
1.
What is the current state of CSR disclosure by listed companies in Nigeria?
2.
Is there a relationship between CSR disclosure and company
financial performance in Nigeria?
3.
What is the relationship between each dimension of CSR disclosure
and financial performance?
1.4 Objectives of the
Study
The objectives of this
study are summarised below:
1.
To examine
the extent of corporate social responsibility disclosure of Nigeria
2.
companies
over the years;
3.
To examine
the empirical relationship between the extent of CSR disclosure and financial
performance of companies listed on Nigerian stock exchange.
4.
To determine
the nature of the relationship between each dimension of CSR disclosure and financial
performance
1.5 Research hypothesis
|
|
Drawing upon the revelations from prior studies, the hypotheses will
be formulated as;
H01: companies in Nigeria do not significantly
disclose CSRD activities
H02: There is no significant relationship between Social
responsibility disclosure and ROA of s companies in Nigeria.
H03: There is no significant relationship between Social
responsibility disclosure and ROCE of s companies in Nigeria.
H04: There is no significant relationship between Social
responsibility disclosure and ROE of s companies in
Nigeria.
1.6 Significance of study
This study makes further
contributions to the literature in several areas. Firstly, this study is
expected to contribute a further understanding of the practices of CSR
disclosures in developing countries and more specifically, in Nigeria. This
would be considered an important contribution as most of the existing studies
about CSR disclosure have been conducted in developed countries, with fewer
studies focussed on in developing countries and even fewer focussed on
Nigeria. Further, the
purpose of this study does simplify the general CSR disclosures of Nigeria. It
has endeavoured to identify current practices of CSR disclosures of companies
in difference industries, which supports the main objective as well.
1.7 Scope of the Study
This study is based on
public companies listed on the Nigerian stock exchange. The purposes of this
study are accomplished via two empirical examinations. Firstly, an examination
of the practices of CSR disclosure is carried out, and secondly, an
investigation of the relationship between CSR disclosure and financial
performance is conducted================================================================
Item Type: Project Material | Attribute: 103 pages | Chapters: 1-5
Format: MS Word | Price: N3,000 | Delivery: Within 30Mins.
================================================================
No comments:
Post a Comment