Assessing the effect of corporate social responsibility on financial performance of a company


Statistics from Nigerian quoted banks

  • Umar Abbas Ibrahim Nile University of Nigeria
  • Okechukwu Umeano Nile University of Nigeria
Keywords: Return on assets (ROA), return on equity (ROE), earnings per share (EPS), Corporate Social Responsibility

Abstract

Purpose – to research the effect of the corporate social responsibility (CSR) on the corporate financial performance (CFP) of quoted banks in Nigeria.

Design/Method/Research approach. Using data of corporate social responsibility expenditure as a proxy for CSR and the trio of return on assets (ROA), return on equity (ROE), and bank earnings per share (EPS) as a proxy for CFP, regression analysis was conducted. ROA, ROE, and EPS data were collected from the banks’ financial statements for the period 2012 – 2016.

Findings. In particular, our analysis and findings suggest that CSR expenditure had no significant effect on all the three proxies of CFP of quoted banks in Nigeria. It supports the arguments in the literature that financial performance alone does not justify expenditure on CSR activities by the quoted Nigerian banks.

Practical implications. Our results show that there is a need for banks to consider other factors to see if the case for CSR activities exists. If they do not, the banks should stop engaging in these activities to increase the banks’ profitability.

Paper type – empirical.

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Author Biographies

Umar Abbas Ibrahim, Nile University of Nigeria

Department of Business Administration

Okechukwu Umeano, Nile University of Nigeria

Department of Business Administration

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Published
2019-12-25
How to Cite
Ibrahim, U., & Umeano, O. (2019). Assessing the effect of corporate social responsibility on financial performance of a company. European Journal of Management Issues, 27(3-4), 73-81. https://doi.org/10.15421/191908