Corporate Social Responsibility Costs on Financial Performance: An Empirical Analysis of Selected Listed Companies in Nigeria

Abstract

The study investigated the effect of corporate social responsibility costs on financial performance; An empirical analysis of selected listed companies in Nigeria. It specifically examined the effect of philanthropic donations, tax to government and employee welfare programs on return on assets of the selected quoted companies in Nigeria. Ex-post facto research design was adopted. A sample size of fifteen (15) companies was extracted from the Nigeria Exchange Group for twelve (12) years 2012 – 2023. Generalised method of moments (GMM) was engaged to analyse the data collected. Generalized method of moments (GMM) was used as the analytical tool because of its relevance as a dynamic panel data estimator and also its ability to control unobserved panel heterogeneity and measurement errors. The study discovered that philanthropic donations do not significantly affect returns on assets while tax to government and employee welfare programs negatively influence return on assets. This implies that philanthropic donations do not eat deep into the companies’ profits which invariably do not sufficiently affect returns on assets of the quoted companies. Extending philanthropic donations to host communities lead to harmony and peaceful co-existence between them and this straightens operations and improvements in the companies’ financial performance.