FIRM CHARACTERISTICS AND CORPORATE SOCIAL RESPONSIBILITY IN NIGERIA

 

ABSTRACT

The study examines the impact of firm characteristics on corporate social responsibility: the moderating role of firm life cycle in quoted non-financial firms in Nigeria. The ex-post facto research design was used in this research alongside the positivism research philosophy. The population of the study comprises of all non-financial firms quoted on the floor of the Nigerian Stock Exchange. The sample for the study is 73 companies which have available and accessible annual reports that covers the study period. The method of sampling was done using the simple random sampling technique. Secondary data was used for this study. The data were retrieved from corporate annual reports of the sampled quoted on the Nigeria Stock Exchange companies for the period 2010-2019 financial years.   This study employed descriptive statistical methods and will includes descriptive techniques such as the mean, standard deviation, range, frequency distribution. More importantly, the random effects (RE) and fixed effects (FE) regression was estimated. Panel data regression is chosen because of the multidimensional nature of the data which has both time or periodic dimension and also cross-sectional dimension. The findings of the study reveals that (i) an increase in the firm size results in a decline in CSR disclosures. (ii) that the older the firms gets, the lower the CSR disclosures and hence younger firms tend to be characterized with increasing CSR disclosures (iii) an increase in the firm leverage results in a decline in CSR disclosures and hence highly levered firms can exhibit declining CSR disclosures. (iv) firms that are more profitable appear to disclose less of CSR information. (v) the type of industry and particularly environmental sensitive industries tend to significantly improve CSR disclosures. (vi) firm life cycle is a significant moderator of the extent to which the firm attributes affect CSR. In the light of the study findings, the following recommendations are suggested. Firstlyy, the study recommends that though CSR disclosure is voluntary, there is the need to ensure that firms of all sizes are held accountable for ensuring social responsibility. Secondly, the study recommends that institutional bodies such as the Financial Reporting Council of Nigeria and Securities and Exchange commission can entrench CSR disclosure practices for older firms that may display tendencies for reduced CSR. Thirdly, the study recommends that highly levered firms can build and sustain creditor confidence by improving their disclosure practices with emphasis also on CSR. Hence, it is in the best interest of highly levered firms to dispel the perception of information asymmetry that reduced disclosures could signal. Fourthly, the study recommends that CSR and profit maximization should not occur at an opportunity cost of each other and both can actually occur simultaneously which is now the mainstream philosophy.

Keywords: Corporate Social Responsibility (CSR), Firm Size, Firm Leverage, Firm Attributes, Firm Age, Firm Profitability, Firm Industry Type, Firm Life Cycle, Firm Characteristics Variable, Nigeria Stock Exchange, Cost Benefits Analysis and Panel Regression Analysis.