Effect of Financial Performance on Corporate Social Responsibility of Listed Non-Financial Firms in Nigeria
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Abstract
This study examines financial performance and Corporate Social Responsibility of listed Non-financial firms in Nigeria for a period of ten years from January 2009 to December 2018. It has been argued that firms with better performance are expected to engage more in Corporate Social Responsibility and consider public interest in corporate decision making. The population of this study covers all the seventy five (75) listed non-financial firms in Nigeria. Out of the 75 listed non financial firms in Nigeria, fifty six (56) firms were selected as sample. Thus, filtering out 18 firms that were listed before January 2009. Specifically, the impact of return on assets, return on equity, return on investment, and net profit margin on Corporate Social Responsibility of listed non-financial firms in Nigeria is investigated using firm size and firm growth as control variables. The study employs correlational and expo-facto research designs using panel multiple regression as techniques of data analysis. Quantitative approach was adopted in the study and the study aligns to positivist paradigm. The study reveals that return on assets, return on investment and net profit margin are positively, strongly, and statistically significant in determining the Corporate Social Responsibility at 1% level of significance respectively. While, return on equity also positively influences the Corporate Social Responsibility of listed non-financial firms in Nigeria at 5% level of significance. The result implies that financial performance influences non-financial firms in Nigeria. The study concludes that non-financial firms with high performance invest more into Corporate Social Services than low performing once. Therefore, the study recommends amongst others that the management of listed non-financial firms in Nigeria should acquire more assets, and issue more shares to prospective investors to improve returns and performance for better corporate social services to their host communities. Again, the management of listed non-financial firms in Nigeria should improve their internal control mechanism for cost reduction and increase of net profit margin. While for return on investment, the management of listed non-financial firms should maintain quality assets that are durable.
Keywords
Financial Performance, Corporate Social Responsibility
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