Effect of Corporate Social Responsibility Reporting on Profitability of Selected Manufacturing Firms in Nigeria

Abstract

The performance of business organizations in the present knowledge based and an increasing more competitive economy is affected by their strategies and operations in market and nonmarket environments. Hence, there is a debate on the extent to which company directors and managers should consider social and environmental factors in making decisions. It is therefore against the foregoing that this study examined the impact of corporate social responsibility reporting on profitability of selected manufacturing firms in Nigerian for the period 2013 to 2017.

The study was a descriptive research of survey type. The population of the study comprises fifty-three in number out of which six companies were purposively selected as sample. The selected companies have their corporate headquarters in Lagos. This study uses data mainly from secondary sources made up of the financial statement for each year covered by the study. The study covered a period of five years from 2013-2017. The analysis were done using descriptive statistics such as mean, standard deviation, kurtosis and skeweness as well as inferential statistics such as panel regression and pearson product moment correlation.

The result of the correlation matrix for the relationship between the two variables ranges between 2% and 40%. The result of the panel regression used in relating the joint power of the variables showed p-value of 0.0000 which made the model to be fitted at 1% level of significant. The study however found that the impact of corporate social responsibility has positive and significant impact on net profit of manufacturing firms in Nigeria. The implication is that, as the companies add to the social wellbeing of the society where the company is located it affects their return in terms of profit positively. This result reinforces the accumulating body of empirical support for the positive impact of CSR on firm’s profitability.

From the findings, the researcher therefore conclude that companies that place more emphasis on CSR, measuring it and treating it an obligation will stand apart. Also, companies that do a proper job of making sure that the society to which they belong, feels their impact are going to be in a position to have a sustainable competitive advantage. Companies should therefore ensure they act as good citizen of the society to which they belong for the ongoing success of the business. The study recommended that manufacturing companies should increase their dedication to giving back to the society, by formulating a framework for CSR spending to boost the standard of live of Nigerians to the point that their social reputation will engender positive and substantial increase in their profitability, as this is essential for their going concern in the country.

Keywords: Profitability, Corporate Social Responsibility, Companies, Environmental factors, Competitive Economy.

DOI: 10.7176/RJFA/11-14-17

Publication date:July 31^st 2020