EFFECT OF CORPORATE SOCIAL RESPONSIBILITY ON FINANCIAL

PERFORMANCE OF MANUFACTURING FIRM IN NIGERIA

A PROJECT SUBMITTED TO THE DEPARTMENT OF ACCOUNTING, FACULTY OF

ADMINISTRATION AND MANAGEMENT SCIENCES, ADEKUNLE AJASIN UNIVERSITY, AKUNGBA
AKOKO, ONDO STATE, NIGERIA.

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF BACHELOR OF

SCIENCES DEGREE (B.Sc.). IN ACCOUNTING.

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 MARCH, 2023

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 DECLARATION

I, Elizabeth Omowunmi JEGEDE with matriculation number 170601153 declare that this
research was carried out under the supervision of the Department of Accounting, Adekunle
Ajasin University, Akungba-Akoko, Ondo State. I attest that this project has not been presented
either wholly or partially for the award of any degree elsewhere

______________________

Elizabeth Omowunmi JEGEDE Signature & Date

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 CERTIFICATION

This is to certify that this project was carried out by Elizabeth Omowunmi JEGEDE with
matriculation number 170601153 under our supervision in the Department of Accounting,
Faculty of Administration and Management Sciences, Adekunle Ajasin University, Akungba-
Akoko, Ondo State, Nigeria.

_________________________ ________________________

Dr. Igbekoyi O. E Date

Supervisor

_________________________ _________________________

Dr. Alade, M. E Date

Head of Department

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 DEDICATION

This project work is dedicated to God Almighty who in love and grace gave me the opportunity
to complete this research work.

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 ACKNOWLEDGEMENTS

To the God of possibilities, I give all praises to God Almighty, for his help throughout
my academic program in Adekunle Ajasin University, Akungba-Akoko Ondo State, and also for
His constant help in completing this research work in spite of all odds.

My sincere gratitude goes to my supervisor, Dr.Igbekoyi O.E. for her motherly love and
care, guidance, assistance and tolerance throughout the course of this research work, who
demonstrated intense interest in my research work by taking the pain of reading through it and
making necessary corrections and several useful suggestions at every point of this research
work. God bless you and your family more abundantly.

My honest gratitude also goes to my amiable Head of Department (HOD Accounting) in

person of Dr. Alade M.E. for his profound tutelage. My gratitude also goes to lecturers, and
non-teaching staff of the Department of Accounting: Prof. Felix Olurankinse, Dr.IgbekoyiO.E.
the immediate past Head of Department, Dr.Oladutire E.O., Dr. Agbaje W.H, Dr. Adegbayibi
A.T., Dr.Adeusi S.A, Mr. Olabisi O.S., Mrs. Odugbemi O.M. , Mr. Aiyesan O.O. Mr. Adegboyegun
A.E. , Mr. Oloruntoba S.R. and Mrs. Olukayode F. Your impact in my life during my stay on
campus cannot be overemphasized.

I want to sincerely appreciate my parent, Mr. Patrick Jegede and, Mrs. Comfort Jegede
for their love, advice, financial supports and prayers throughout my academic program. May
you live to eat the fruits of your labour.

Finally, this list will not be complete if I do not acknowledge the support of my amiable
friend in person of Olubukunmi Faith for his compassionate kindness and support towards the
completion of this project work and my other colleagues for their efforts during the course of
this program. I love you all, God bless.

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 TABLE OF CONTENTS

Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgement v
Table of contents vi
List of Tables ix
List of Abbreviation x
Abstract xi

CHAPTER ONE: INTRODUCTION

1.1 Background to the Study 1
1.2 Statement of the Problem 4
1.3 Research Questions 6
1.4 Objectives of Study 6
1.5 Research Hypothesis 7
1.6 Significance of the Study 7
1.7 Scope of the Study 8
1.8 Operational Definition of Terms 8
CHAPTER TWO: LITERATURE REVIEW
2.1 Conceptual Review 10
2.1.1 Corporate Social Responsibility 10
2.1.1.2 Firm Financial Performance 13
2.1.1.3 Return on Assets 15
2.1.1.4 Return on Equity 17
2.1.1.5 Tobin’s Q 19

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2.1.2 CSR and Financial Performance 20
2.2 Theoretical review 21
2.2.1 Shareholder theory 21
2.2.2 Stakeholders theory 22
2.3 Empirical Review 24
2.4 Gap in Literature 31
CHAPTER THREE: METHODOLOGY
3.1 Research Design 32
3.2 Source of Data 32
3.3 Population of the Study 33
3.4 Sample size and Sampling Technique 33
3.5 Data collection Instrument 33
3.6 Model specification 33
3.7 Measurement of Variables 34
3.8 Data Analysis Technique 35
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS, AND DISCUSSION OF FINDINGS
4.1 Descriptive Statistics 36
4.2 Correlation Matrix of Dependent and Independent Variables 37
4.3 Random Regression Result for CSR and ROA Relationship 40
4.4 Random Regression Result for CSR and ROE Relationship 41
4.5 Random Regression Result for CSR and Tobin Q Relationship 42
4.6.1 Evaluate the effect of corporate social responsibility on firm’s return on assets 45
4.6.2 Assess corporate social responsibility effect on firm’s return on equity 43
4.6.3 Ascertain the effect of corporate social responsibility on firm’s Tobin Q 44
CHAPTER FIVE: SUMMARY, CONCLUSION, AND RECOMMENDATIONS
5.1 Summary 47
5.2 Conclusion 48
5.3 Recommendations 48
REFERENCES 50

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 APPENDIX 55

LIST OF TABLES

Tables Pages

3.1 Definition of Variables 34

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4.1 Descriptive Statistics 37

4.2 Correlation Matrix 38

4.3 Random Regression Result for CSR and ROA Relationship 40

4.4 Random Regression Result for CSR and ROE Relationship 41

4.5 Random Regression Result for CSR and Tobin Q Relationship 42

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 LIST OF ABBREVIATIONS

CSR Corporate Social Responsibility

ROA Return on Asset

ROE Return on Equity

NGX Nigeria Exchange Group

SEC Securities and Exchange Commission

ESG Environmental, Social, and Governance

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 ABSTRACT
In recent years, firms have been pressured by community stake holders to engage in corporate
social responsibility (CSR). Many firms have responded to these pressures by implementing CSR
activities in their operations, while others have opposed. Firms that opposed to CSR have
appealed for a compromise between CSR and profitability. The broad objective of this study is
to examine the effect of corporate social responsibility on the financial performance of listed
manufacturing firm in Nigeria. We substitute the independent variable (corporate social
responsibility) using the 10 corporate social responsibility disclosure index of 1 if firm disclose
any of the CSR index and 0 if otherwise.
Data for the study were sourced through secondary source from the financial statements of 20
manufacturing companies listed on the Nigerian Exchange Group within the period studied
(2017-2021). In other to fulfil the specific objectives, the study adopted ex-post facto research
design. Descriptive Statistics, Correlation and Linear regression, (E-view) was used to analyse
the data in order to establish relationship between the variables.
Findings revealed that, a positive and significant relationship exist between corporate social
responsibility and firm’s return on assets (ROA), return on equity (ROE) and Tobin Q of listed
companies in Nigeria. Therefore, the study concluded that there is a positive relationship
between corporate social responsibility and firm financial performance in Nigeria.
The study concluded that the success or failure of a firm lies on how well their social
responsibilities are being performed. Hence, by putting a sound corporate social responsibility
practice in place the firm is able to improve its financial performance and allocate resources
efficiently. Therefore the study recommended that government should enforce laws on
institutions that fail to adhere to corporate social responsibility implementations and
government should have shares in most of these listed companies as it will give them the
absolute right to monitor and enforce the implementation of corporate social responsibility and
it disclosure.

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 CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Corporate scandals at Enron and WorldCom, Cadbury, NNPC etc. have thrust debates
concerning small and medium scale enterprises and corporate social performance to the forefront
of the minds of shareholders, managers, and public policy makers (Uwuigbe, 2011).
Traditionally, companies have to focus on strategies for their business operations and profit such
as differentiation, diversification, turnaround, concentration and globalization (Awan & Akhtar,
2014). However, recent developments in strategic thinking support the need to add activities that
expand out from the company into society (Awan & Akhtar, 2014). Corporations around the
world are with a new role, to meet the needs of the present generation without compromising the
ability of the next generation to meet their own needs (Babalola, 2013). Since the publication of
the first separate corporate environmental reports in 1989, the number of companies that has
started to publish information on its environmental, social or sustainability policies has increased
substantially (Uwuigbe, 2011).
The role of business in developing countries have changed from a classical approach
“profit maximization” to a socially responsible approach, businesses are not only responsible to
their stockholders but also to their communities, companies create wealth, job and other
opportunities for society but in contrary they pollute and destroy environmental ecology which
has a devastating effect on human health (Amidu, Liu, & Sesay (2017). Scientist have confirmed
that approximately 70% of air pollution leads to cancer, asthma, emphysema, premature death
and much more deadly disease in the world at large. Amidu et al further opined that it also
destroys economic growth, as most labor force will be affected and government will spend a lot
on its health care and thus corporations around the globe are expected to meet this ever-growing
expectation of contributing to the welfare of society as citizens.

This expectation has grown as the world has become globalized and multinational
companies are increasingly called upon to play the role of global citizens. Each corporation must
share its economic gains with society and should focus not only on its shareholders but all
stakeholders (Mawih, Shaker, & Syed, 2015). Which means firm therefore must focus on not
only increasing its economic gains but also being a good corporate citizen.

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 Corporate social responsibility is seen to be the activities of companies involving taking
into account their complete impact on society and the environment, not just their impact on the
economy. It is about business assuming responsibilities that go well beyond the scope of simple
commercial relationships. Mawih et al (2015) viewed this concept to represent an extension of
other similar concepts such as social responsibility, corporate social performance and stakeholder
theory, all of which depict the relationship between companies and their communities but for the
purpose of this study corporate citizenship will be used interchangeably with corporate social
responsibility.

Recently, there have been growing concerns over corporate social responsibility (CSR).
Corporate scandals have drawn public attention to the social roles and responsibilities of
business enterprises. The general public believes that businesses have responsibilities toward
society, and companies are now under intense public scrutiny. Therefore, corporate social
responsibility has become an important research topic in business studies (Sweeney, 2009).
Issues such as pollution, waste, resource depletion, product quality and safety, the rights and
status of workers, and the power of large corporations have become the focus of increasing
attention and concern. In this context, companies have been increasingly urged to become
accountable to a wider audience than shareholder and creditor groups. As a matter of fact, public
awareness and interest in environmental and social issues and increased attention in mass media
have resulted in more social disclosures from corporations in the last two decades (Korathotage
2012; Deegan & Gordon, 1996).
There are numerous reasons underlying organizations’ motivations for engaging in
socially responsible endeavors. First, firms may have altruistic intentions: they simply believe
their corporate social responsibility efforts are part and parcel of being a good global citizen.
Second, organizations may engage in corporate social responsibility activities as ‘‘window
dressing’’ to appease various stakeholder groups, such as nongovernmental organizations. Third,
there are potential contracting benefits: firms believe that corporate citizenship helps recruit,
motivate, and retain employees. Fourth, there are customer-related motivations: corporate
citizenship may entice consumers to buy a company’s products or services. Fifth, companies’
focus on environmental concerns can lead to reductions in production costs. Finally, corporate
citizenship can be viewed as an integral part of a company’s risk management efforts (Sprinkle
& Maines, 2010).

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 Companies usually inform the public of their CSR activities in the annual report or in
separate social reports (CSR Report or Sustainability Report). However, there is no
standardization or uniformity in terms of the items reported, or the way of reporting (Abilasha. &
Madhu, 2019). Corporate social responsibility has a goal that companies are to maximize profits
of business for shareholders but without hurting the basic rules of society and without
disrespecting the law and the ethic. This means that CRS are expected not to have any negative
impact on the profitability of the organization. Many companies make it a point to highlight
activities related to social responsibility in their financial statements, reports and websites, which
characterizes the social disclosure. Disclosure has high quality when it is able to provide useful
information to external users. CRS disclosure makes public the responsiveness of companies to
socio-environmental issues, as well as the behavior of managers facing real situations, for
example, the benefits to employees, the concern for people living around, or even the handling of
polluting materials. Consequently, it is expected that high level of governance corporative be
correlated with high levels of CRS disclosure (Christopher, 2017).

1.2 Statement of Problem

In an attempt to study the relationship between corporate social responsibility and
financial performance in Nigeria; it was discovered that some companies practice corporate
social responsibility without disclosing it in their financial statement while others do not practice
it. Also, there is no uniformity by those that display it. For example, some companies display it
as charity while Ajide and Aderemi (2014) observed that business organizations in Nigeria incur
huge expenditures on social responsibility because they regard Corporate Social Responsibility
(CSR) as a public relations stunt used by large corporations to look good in front of customers
and other stakeholders. However, most companies do not find the justification for such, as the
relationship between CSR expenditure and financial performance of corporations in developing
nations remains unclear. Obi (2013) as in Ajide and Aderemi (2014) noted that in the year 2011,
the oil and gas sector spent N9.5 billion on CSR, followed by telecoms with N6.4 billion.

The banking industry came in third position with the report that a total of N1.869 billion
was spent by eight Nigerian banks in 2012 on various community-related projects under
corporate social responsibility to identify with the society in which they operate. The figure is
about 70 percent of the total CSR expenditure of N3.4 billion by the banking industry in year

15
2011 with prediction that the figure would double in the next two years due to increased
understanding of the concept of CSR. In view of the huge expenditures incurred annually on
CSR, it is generally held that corporate social responsibility (CSR) could increase company
profits.

Different researchers however analyse different aspects of social responsibility and social
responsibility itself differs depending on the country context (Sapkauskiene and Leitoniene,
2014). It can also be observed that the majority of studies were performed in developed countries
although over the recent years there has been an increase in their number in developing countries
as well. The research of corporate social responsibility showed that recently the main focus is
paid on disclosure of social information. The problem remains that the different studies provide
mixed results about nature and scope of social information, about theories on corporate social
information disclosure behaviour and about CSR impact to company’s reputation and financial
performance.

There is a crying need for an in-depth study into the quality, extent of corporate social
responsibility disclosure and identification of areas for future improvement so that transparency
can be ensured, especially in developing countries like Nigeria where CSR studies are limited
(Ajide and Aderemi, 2014). While some studies prove a positive association between
profitability of firms and CSR expenditures (Olayinka and Temitope 2011; Amole, Adebiyi, and
Awolaja, 2012), other studies prove a negative relationship between the two (Bessong and
Tapang, 2012).

Furthermore, the practice of CSR has been dominated by developments in Western

developed countries, such as the United States of America (USA) and the United Kingdom (UK)
and it is unclear whether it translates easily into developing and low-income countries (Awan
and Akhtar, 2014). Thus, a firm cannot ignore the problems of the environment in which it
operates (Babalola, 2013). This implies that a firm that wish to continue operation and enjoy
customers’ loyalty and patronage must seek social audit by scanning the environment it operates
and ascertain the needs of the dwellers so as to provide it satisfactorily (Babalola, 2013). Though
studies on corporate social responsibility and performance remain rampant, there is a need to re-
examine the relationship between corporate social responsibility disclosure and expenditure in
financial reports on profitability

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1.3 Research Objectives

The broad objective of this study is to examine the effect of corporate social responsibility on
financial performance in Nigeria. The specific objectives are to:

i. evaluate the effect of corporate social responsibility (CSR) on firm’s return on assets
(ROA)
ii. assess the extent to which corporate social responsibility (CSR) affect firm’s return on
equity (ROE)
iii. Ascertain the effect of corporate social responsibility (CSR) on firm’s Tobin Q.
1.4 Research Questions

In pursuance of the main aim and specific objective of the study, the study possesses the
research question to guide the research focus:

i. How does corporate social responsibility (CSR) affect firm’s return on assets (ROA)?
ii. To what extent does corporate social responsibility (CSR) affect firm’s return on
equity (ROE)?
iii. What is the effect of corporate social responsibility (CSR) on firm Tobin Q?

1.5 Research Hypotheses

In line with the research question and objective of the study, the following hypotheses was tested
during the course of this study.

Ho1: corporate social responsibility (CSR) has no significant effect on the firm’s return on assets
(ROA).

Ho2: there is no significant relationship between corporate social responsibility (CSR) and firm’s
return on equity (ROE).

Ho3: corporate social responsibility (CSR) has no significant relationship and effect on firm’s
Tobin Q.

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1.6 Significance of the study

This study will be of great importance to firms, because it will help them to know the
effect of corporate citizenship on firm financial performance and also to see society as part of
them and not a separate body and that businesses have a societal contract which they should be
committed in executing.

The study will be of great use to managers to formulate good and sound operating
strategies that reduces production, operating, wastages and monitoring cost, diversify risk across
and overcome liquidity risk, increase firm’s efficiency which in turn provides higher returns and
leads to long-term financial success that attracts investors. It will also help managers to create
wealth for their existing stockholders, secure additional capital at reduced interest rate, increase
long term profit, motivates customers, attract, recruit, motivates and retain competent employees.

It will assist Government to provide an in-depth analysis that will enable them to develop
an appropriate drive for implementation of corporate citizenship policies and integrate them with
community development. It will also be useful to government in order to develop strategies
needed to guide citizens towards an efficient functioning of firms within their communities. It
also benefits both the government and private sectors greatly as the empirical facts would serve
as valuable guidance and remainder for them to scrutinize the effectiveness of each policy they
implement.

Moreover, it will provide useful information and serve a point of reference for
researchers and academic who will intend to investigate further on corporate social responsibility
and firm performance.

1.7 Scope of the study

This study is within the area of corporate social responsibility and financial performance
of listed firm in Nigeria. This study will focus on selected firm listed the Nigeria Exchange
Group (NGX)as at 31st December, 2021. This study is going to be covering some selected
manufacturing firms in Nigeria within the period of ten years (2017-2021). 2017 was selected for
analysis because Securities and Exchange Commission (SEC) approved Nigerian Stock
Exchange’s Sustainability/ ESG Disclosure in November 2017, for listed companies.

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1.8 Definition of Terms

Financial performance: A measure of the firm’s aggregate level of financial profitability over a
given period of time.

Return on assets (ROA): A financial ratio that is commonly used to measure a firm’s financial
performance.

Tobin Q: this is another measurement use in determining the performance of an organisation

Corporate citizenship: this can be explained as the ability of firms to do what is

expected morally or ethically.
Corporate social responsibility: this is a business’s contribution to sustainable development by
meeting the needs of the present without sacrificing the ability to meet those of the future.

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 CHAPTER TWO
LITERATURE REVIEW
This chapter discussed the conceptual review of literatures, theoretical reviews of theories and
empirical review of existing literature. The gaps in the literature were discuss thereafter.

2.1 Conceptual Review

This section discussed further on defining the various concepts on corporate social
responsibility, firm financial performance, Return on Asset, Return on Equity, Tobin Q and the
relationship linking this concept will be addressed.

2.1.1 Corporate Social Responsibility

CSR is viewed from different perspectives and angles. The perspectives vary from
individual authors to organizations and as a result, there is no generally accepted unified
definition of the concept. CSR was defined as the obligations of businessmen to pursue those
policies, to make those decisions, or to follow those lines of action which are desirable in terms
of the objectives and values of the society. CSR means that companies take into consideration
the concerns of a wide range of corporate stakeholders (e.g., shareholders, employees, suppliers,
customers, government, and the local community) and incorporate principles of social fairness
and environmental sustainability into the business process (Alkababji, 2014). According to
Carroll and Buchholtz (2003) corporate social responsibility can be defined as the "economic,
legal, ethical, and discretionary expectations that society has of organizations at a given point in
time". According to Macmillan (2005) as in Adeyanju (2012) “CSR is a term describing a
company’s obligation to be accountable to all its stakeholders in all its operations and activities.
Socially responsible companies will consider the full scope of their impact on communities and
the environment when making decisions, balancing the need of stakeholders with their need to
make a profit”.

“CSR is concerned with treating the stakeholders of the firm ethically or in a socially
responsible manner. Since stakeholders exist both within a firm’s and outside a firm, hence,
behaving socially and responsibly will increase the human development of stakeholders both
within and outside the corporation” (Clarkson, 1995, as in Adeyanju, 2012). Corporate social
responsibility may be referred to as "corporate citizenship" and can involve incurring short-term

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costs that do not provide an immediate financial benefit to the company, but instead promote
positive social and environmental change (Mahbuba and Farzana, 2013). In emphasizing the
ecological conceptualization of social responsibility. The concept of Corporate Social
Responsibility is closely linked with the principle of Sustainable Development, which argues that
corporations should make decisions based not only on financial factors such as profits or
dividends, but also based on the immediate and long-term social and environmental
consequences of their activities (Manescu and Starica, 2008).

The concept of Sustainable Development, was first introduced by the World Commission
on Environment and Development (1987), was defined as meeting ‘the [human] needs of the
present without compromising the ability of future generations to meet their own needs’.
Elkington (1997) as in Nuryaman (2013) states that Corporate Social Responsibility (CSR) is
divided into three main components, namely: people, profit and planet. These three components
are currently frequently used as a basis for planning, implementation and evaluation (reporting)
programs of corporate Social Responsibility (CSR), which later became known as the triple
bottom line. ‘People’ in CSR means a business must be responsible for the promotion and social
welfare as well as all its stakeholders.

Profit in the Company's CSR meaning must not only have the advantage for the
organization alone but should be able to deliver economic progress to companies stakeholders.
'Planet', it’s meant that Company should be able to use natural resources, in production activity
they have to very responsible maintaining the state of the environment and minimize waste of
production. Triple bottom line is a synergy of three elements which are the basic components of
the basic implementation of Corporate Social Responsibility (CSR). Triple bottom line is often
used as a reference in making programs Corporate Social Responsibility (CSR).

Dahlsrud (2006) as in Awan and Akhtar (2014) analysed the differences and similarities
in CSR definitions by doing a literature analysis. He identified five categories and dimensions,
which are commonly associated with definitions of CSR: Environmental, social, economic,
voluntary, and stakeholder concern (Dahlsrud, 2006, as in Awan and Akhtar, 2014). The concept
of CSR was not known clearly in the first half of the twentieth century, where corporations were
trying to maximize their profits by all means (Dabbas and Al-rawashdeh, 2012). According to
Alkababji (2014) CSR developed because of the expansion and globalization of the world

21
economy which led to the emergence of multinational companies with economic power greater
than the gross domestic product of many small or developing countries. Therefore, business
activities correspondingly have a more extensive effect on society than ever before. In addition,
with many developed countries recently experiencing severe financial crisis, society increasingly
requires that companies take responsibility for environmental conservation, employment, safety,
and local community development—areas that previously were primarily the responsibility of
national governments (Alkababji, 2014).

2.1.1.2 Firm Financial Performance

Performance refers to the extent to which organization goals and objectives are achieved
effectively and efficiently. A perennial question that plagued the previous studies concerning
firm financial performance is as regards the choice of measure of performance. Which is the
appropriate measure of firm performance? The concept of performance is a controversial issue in
finance largely due to its multidimensional meanings. Research on firm performance emanates
from organization theory and strategic management (Murphy, Trailer & Hil 1996). Performance
can take many forms depending on who needs the information and for what purposes.
Shareholders will want to be certain about viability, growth, return on investment and continued
financial sustainability of the firm (Brown & Medoff, 2003).
Financial performance measures include analyzing the financial statement of the
organizations. Financial statements provide information to the management on the available
resources, how they were financed and what the company accomplishes with them. Financial
statement seeks to evaluate the performance of management. They can be grouped as liquidity,
operating and profitability, risk growth and market values (Reill and Brown 1997). Return on
assets (ROA) is used by Chen (2004) and Cronqvist and Nilson (2002), among others as
measures of firm’s performance.
One of the most fundamental facts about business is that the operating performance of the
firm shapes its financial structure. Performance measurement is the determination of the
company performances periodically especially for operational activities, organizational structure
and employees based on the objectives, standards and criteria established previously in research
conducted by Veron (2010). According to Horhgen (1993) cited in Veron (2010), performance
measurement has the objective to measure business performance and management compared
with the goal or the target of company. It is also true that the financial situation of the firm can

22
also determine its operating performance. Financial statements are therefore important diagnostic
tools for the informed manager. The financial statement is a statement that describes the financial
condition and result of operations of a company at a given period of time (Harahap, 2010).
Financial performance is a subjective measure of how well a firm can use assets from its
primary mode of business and generate revenues. This term is also used as a general measure of
a firm’s overall financial health over a given period of time, and can be used to compare similar
firms across the same industry or to compare industries or sectors in aggregation. There are many
different ways to measure financial performance, but all measures should be taken in
aggregation. Line items such as revenue from operations, operating income or cash flow from
operations can be used as well as total unit sales. Furthermore, the analyst or investor may wish
to look deeper into financial statements and seek out margin growth rates or any declining debt.
There are many different stakeholders in a company, including trade creditors, bond
holders, investors, employees and management. Each group has its own interest in tracking the
financial performance of a company. Analyst learn about financial performance from data
published by the company in the annual report. The annual report is a required legal document
that must be published by all public companies. The purpose of the report is to provide
stakeholders with accurate and reliable financial statements that provide an overview of the
company’s financial performance. In addition, these statements are audited and signed by the
leadership of the company along with a number of other disclosure documents. In this way, the
annual report represents the most comprehensive source of information on financial performance
made available for investors on an annual basis. Included within the annual report are three
financial statements, the statement of financial position and the cash flow statement.
Financial performance in broader sense refers to the degree to which financial objectives
being or has been accomplished and is an important aspect of finance risk management. It is the
process of measuring the results of a firm’s policies and operations in monetary terms. It is used
to measure firm’s overall financial health over a given period of time and can also be used to
compare similar firms across the same industry or to compare industries or sectors in
aggregation. Firms and interested groups such as managers, shareholders, creditors, and tax
authorities look to answer important questions like: What is the financial position of the firm at a
given point of time?, How is the financial performance of the firm over a given period of time?.
These questions can be answered with the help of a financial analysis of a firm. Financial

23
analysis involves the use of financial statements. A financial statement is a collection of data that
is organized according to logical and consistent accounting procedures. Its purpose is to convey
an understanding of some financial aspects of a business firm. It may show a position of a period
of time as in the case of statement of financial position. Or may reveal series of activities over a
given period of time, as in the case of an Income Statement. Thus, the term ‘financial statements’
generally refers to two basic statements: The statement of financial position and the income
statement.
2.1.1.3 Return on Assets (ROA)
Return on assets ratio is a measure of the effectiveness of the firm in generating profits i.e
the return achieved on a company’s assets (Firer, Ross, Westerfield & Jordan 2004). The return
is taken to be the attributable profit (i.e profit after tax, minority interests and preference
dividends, attributable to ordinary shareholders). ROA is calculated by taking the net result over
assets for each specified year. ROA measures how efficiently the company’s assets are utilized
to generate profit. This ratio is often used by investors and potential investors to evaluate a
company’s leadership. ROA is best calculated in many different ways, i.e one can apply results
before taxes and interest instead of net results. However, the net result is used frequently and
since it is more accessible we decided to use the net results and not consider taxes, interest as
well as extra ordinary items.
ROA tells you what earnings were generated from invested capital (assets). ROA for public
companies can vary substantially and will be highly dependent on the industry. According to a
research conducted by Gleason, Murthur and Murthur (2000), he found that firms’ capital
structure has a negative impact on firm’s performance as measured by ROA. This is why when
using ROA as a comparative measure, it is best to compare it against a company’s previous ROA
numbers or the ROA of a similar company.
The assets of the company are comprised of both debt and equity. Both of these types of
financing are used to fund the operations of the company. The ROA figure gives investors an
idea of how effectively the company is converting the money it has to invest into net income.
The higher the ROA number, the better, because the company is earning more money on less
investment. For example, if one company has a net income of N1million and total assets of
N5million, its ROA is 20%: however, if another company earns the same amount but has total
assets of N10million, it has an ROA of 10%. Based on this example, the first company is better

24
at converting its investment into profit. When you really think about it, management’s most
important job is to make wise choices in allocating its resources. Anybody can make a profit by
throwing a ton of money at a problem, but very few managers excel at making large profits with
little investment.

25
2.1.1.4 Return on Equity (ROE)
ROE, along with return on assets (ROA), is one of the all-time preferences and perhaps
most widely overall measure of corporate financial performance (Rappaport 1986). This was
confirmed by Monteiro (2006) who stated that ROE is perhaps the most significant ratio an
investor should consider. The fact that ROE represents the end result of structured financial ratio
analysis, also called Du Pont analysis (Stowe, Robinson, Pinto & McLeavy, 2002; Correia,
Flynn, Uliana & Wormald, 2003; Firer, et al., 2004) contributes towards its popularity among
analysts, financial managers and shareholders alike.

ROE is calculated by taking the profit after tax and preference dividends of a given year
and dividing it by the book value of equity (ordinary shares) at the beginning of the year.
Average equity can also be used. Equity would consist of issued ordinary share capital, plus the
share
premium and reserves. The three components, or ratios above, can be described (in sequence) as
profitability, asset turnover and financial leverage. The ROE can therefore be improved by
improving profitability, by using assets more efficiently and by increasing financial leverage.
Over time it has become clear that improving the ROE may not necessarily improve shareholder
value. Although ROE has some appeal because it links the income statement (earnings) to the
balance sheet (equity), it has some serious imperfections as a measure of performance. The first
and most obvious one is that the earnings can be (and is) manipulated legally within the
framework of Generally Accepted Accounting Practice (GAAP) via changes in accounting
policy. The second flaw is that ROE is calculated after the cost of debt, but before taking into
account the cost of own capital. ROE rises with more financial gearing, as long as the returns
earned on the borrowed funds surpass the cost of the borrowings. The danger inherent in
increasing the financial gearing beyond a certain level is that the increased financial risk may
cause the value of the company and the share price to fall.

Pursuing a higher ROE may lead to wealth destruction, which is not in line with the
economic principles of shareholder value creation. Rappaport (1986) has pointed out that the
second component of ROE, namely asset turnover, is affected by inflation in such a way that it
may incrase even when assets are not efficiently utilized. He reasons that sales immediately
reveal the impact of inflation, whereas the book value of assets, which is a mixture of new and

26
older assets, does not become accustomed quickly to the effects of inflation. Rappaport’s (1986)
studies in the 1970’s revealed that although the earnings of Standard & Poor’s 400 companies
decreased dramatically during the 1970’s, their ROEs actually increased through increased levels
of asset turnover and gearing. The markets, however, were not misled by this apparent ‘better
performance’. Consequently, the market earnings during this period were generally very poor, or
‘dismal’, according to Rappaport. Around 1989 when Reimann (1989) published his work, ROE
was used extensively for measuring whether value was being created for shareholders. The
reason behind the adoption of ROE as a measure was that it gave more reliable outcomes than
earnings per share (EPS) (Reimann, 1989).

As it is expedient to consider how investors value the shares of a company Reimann

(1989) put into consideration a number of strategy consulting firms and found that they focus
their measurements on the spread between ROE and the cost of equity. If the spread is positive, it
indicates that a company has advantageous growth opportunities. Reimann (1989) also pointed
out changes to accounting conventions (policies) as being a setback when using ROE as a
performance measure. It was also acknowledged that financial measures such as ROE may be
too short-term and that longer-term measures, perhaps more qualitative, must be adopted as well.

According to Ross et al (1996) ROE is a measure of how the shareholders progressed

during the year. Since pleasing shareholders is the main goal of a company, they are of the
opinion that ROE is, in an accounting sense, the true bottom-line measure of performance. ROE
is a measure of profit per rand invested in equity. Helfert (1991) chooses to call this ratio “return
on net worth” and states that it is the most common ratio used for measuring the return on the
owners’ investment.
ROE is an important indicator which tells us how the company has used the resources of its
owners. This ratio reveals the degree to which the objective of wealth maximization of
shareholders has been accomplished.
2.1.1.5 Tobin’s Q
Tobin’s Q being a measure of market valuation has been expansively used by various
researchers in their studies (Farrer and Ramsay, 1998, Mohanty, 2002, Weir and Laing 2003,
Brown and Caylor, 2004, Jog and Dutta, 2004, Dwivedi and Jain, 2005 and Khiari, Karaa, and
Omri, 2007). Tobin’s Q ratio has been devised by James Tobin. This ratio is based on the

27
conception that combined market value of all the companies on the stock market should be equal
to their replacement costs (www.investopedia.com/terms/q/qratio). This is the ratio of market
value of equity and debt divided by the replacement costs of total assets. Firms presenting
Tobin’s Q greater than unity are considered to be using scarce resources effectively, while those
with Tobin’s Q less than unity are using resources poorly.

Tobin’s Q as a measure of firm performance represents the value that investors put on in
firm’s shares above the total value of assets of the firm and thus represents investor’s confidence
which in turn is an indicator of the effectiveness of small and medium scale enterprises
mechanisms of the firm (Dwivedi and Jain, 2005). We calculated Tobin’s Q ratio as a market
value of equity plus book value of debt divided by book value of total assets.

2.1.2 CSR and Financial Performance

Profitability is often used as a measure to assess the achievements and performance of the
company or as the basis of assessment measures, such as earnings per share (Zaki and Othman,
2011). Profitability is an indication of the success of an enterprise, although not all companies
make profits as its primary purpose, but it will require effort to maintain profits (Zaki and
Othman, 2011). Profitability ratios include return on assets (ROA), net profit margin (NPM), and
others which are clear indicators to financial performance. The increased interest in
environmental, social and governance issues stimulated a dynamic development of econometric
and financial literature focusing on the relationship between corporate social performance and
firm profitability (Manescu and Starica, 2008).

Friedman argued that only csr which is related to the company's business is positively
associated with company's profit, i.e. csr concerning the use of resources in terms of achieving
profitability and well-being of shareholders (Nuryaman, 2013). This stream of research argued
that CSR activity is a high cost, which in turn reduces the profit of a company. Friedman argued
that management policies should be aligned with the interests of the stock holder, because
management is selected by the shareholders (Nuryaman, 2013).

28
2.2 Theoretical Review

2.2.1 Shareholder theory

According to the shareholder theory, propounded by Milton Friedman 1970. The goal of
companies is to maximize shareholders’ wealth. The sole responsibility of companies is to “make
as much money as possible while conforming to the basic rules of the society, both those
embody in law and those embody in ethical custom.” As a company is deemed to be a vehicle for
creating wealth for those who risk capital (Greenwood, 2001), maximizing profit is necessary for
its survival.
The theory sees the primary responsibility of firms as that of generating profits for
shareholders and working hard to raise their stock values. The perception on the performance of
social activities by firms for society is that such activities are not necessary except the laws
specify otherwise since business firms are created primarily to enhance shareholder value.
Without argument, this theory focuses on wealth creation and shareholder value with less
commensurate consideration for the wellbeing of society.
Although wealth creation is part of firms’ social responsibility, firms should not take it as
the only social responsibility they should shoulder. It is not also good enough that firms cite
compliance with relevant laws as part of meeting their social responsibility because they can
comply with the laws and still exploit their workers, consumers and society’s resources. In order
therefore that they are seen to balance their needs with those of society and achieve sustainable
development firms have to considerably integrate their interests with those of their employees,
customers, distributors and those of other stakeholders in society, which to oi companies and a
host of other companies include the interest of the environment as a stakeholder.

As managers have agency relationships with shareholders, they have a fiduciary duty to
maximize profit (Friedman, 1970) and will only undertake projects that have a positive financial
value. Therefore, CSR initiatives may lead to objections from shareholders. According to Ruf et
al. (1998), CSR contributions are outflows of economic resources that cannot create wealth for
shareholders. From the standpoint of the shareholders, CSR contributions ruin their investment.
However, shareholder theory does not prohibit CSR contributions that create value (Sweeney,
2009). In this case, the cost-benefit principle dictates a firm’s CSR considerations, including

29
contributions and disclosure. Under the shareholder theory, CSR is justified if the related future
income is expected to be higher than the current associated costs.
2.2.2 Stakeholder theory
This theory was propounded by Freeman 1984. This legitimacy is established through the
existence of an exchange relationship. Stakeholders include stockholders, creditors, managers,
employees, customers, suppliers, local communities, and the general public.
Freeman (1984) argues that companies’ responsibilities are not limited to shareholders, but
encompass their stakeholders, groups of people who can affect or be affected by the companies,
such as employees, customers and financiers. As stakeholders can contribute to a company’s
wealth capacity (Post et al, 2002), to sustain growth, companies should prioritize stakeholders’
interests (Van der Laan, 2009) and take their perspectives and activities into consideration. In
this case, CSR disclosure is used as a means of displaying company accountability (Van der
Laan, 2009).
The underlying argument has two strands. First, stakeholders provide the resources, such
as capital, labor and revenue (Sweeney, 2009). If companies act irresponsibly toward employees,
customers, and society, then they risk losing these critical resources. Second, stakeholders are
both potential beneficiaries and risk bearers (Post et al., 2002). They are exposed to risks
associated with socially irresponsible behavior, such as poor-quality products or exploitation of
labor and the natural environment. According to the distribution justice principle (Sweeney,
2009), firm’s profit should be divided among all of the risk takers, including stakeholders.
Metcalfe’s (1998) sub-classification of stakeholders into primary and secondary has
helped to clearly define this concept. Primary stakeholders are those whose participation is
critical to a company’s operation, e.g., customers, employees, and shareholders. Secondary
stakeholders are people who affect or are affected by a company’s activities, but are not engaged
in company transactions, e.g., the media (Metcalfe, 1998). This distinction clarifies the
determinants of CSR initiatives. Stakeholder theory can be broken into three parts: descriptive,
normative, and instrumental (Donald & Preston, 1995). The first is the description of the specific
characteristics of responsible companies. The second is the justification for the actions taken by
the company based on the moral guidelines (Donald & Preston, 1995). The third is the
connection between the stakeholder approach and the desired outcome (Donald & Preston,
1995). It examines the link between CSR performance and firm performance, contributing to the

30
understanding of the instrumental part of this theory. Stakeholder theory is used to explain the
motivations for CSR reporting. Roberts (1992) uses stakeholder theory to analyze the
determinants of CSR disclosure using logistic regression. He examines the link between CSR
disclosure and stakeholder power, and a firm’s strategic posture and past economic performance
respectively. Specifically, he uses percentage of ownership, donations to political parties and
leverage ratio as proxies for stakeholder power, and the number of public affairs staff and
philanthropic foundations as proxies for strategic posture. In addition, he uses stock-market and
accounting-based measures to test the effect of economic performance in the previous year on a
firm’s decision regarding CSR disclosure in the current year. As the information on the proxies
for stakeholder power and firms’ strategic posture are difficult to obtain from Chinese firms, this
study focuses on testing the relationship between economic performance and the publication of
CSR reports.
2.3 Empirical Review

Janell and Cook (2011) examine whether ethical corporate behavior is associated with a
market-value premium. Results of their prior studies are mixed. they use firms listed by Business
Ethics as “The 100 Best Corporate Citizens” as sample of ethical firms. The univariate results of
their study indicate a significant relationship between ethical corporate behavior and financial
performance (i.e., greater profitability and efficiency, and lower cost of capital). The results of
multivariate tests, controlling for prior year market value of equity, yield results which indicate a
marginally significant association between being recognized as ethical in that year and market
value of equity, but no association between being recognized as ethical at least one time and
market value of equity and they conclude that ethical corporate citizenship does indeed benefit a
firm.
Dabbas and Al-rawashdeh (2012) using primary data examined the effect of corporate
social responsibility (CSR) on the profitability of industrial companies in Jordan. They used a
sample of 50 workers in the industrial companies in Jordan to obtain answers to the
questionnaires. The study finds that there is a significant relationship between CSR activities,
such as the provision of donations/establish non-profit projects, support projects/charities and the
profitability of industrial companies. However, there is no relationship between awareness &
guidance campaigns and the profitability of the industrial companies.

31
 Wibowo (2012) examined the impact of corporate social responsibility disclosure and
profitability (measured by Return on Asset) using a sample of 25 firms from SRI-KEHATI Index
and covering the period 2005 – 2010. Findings show that there is positive impact of the social
performance to the profitability of the firms and also there is positive impact of the profitability
of the company to the social performance of the firms.
Uadiale and Fagbemi (2012) investigate the impact of CSR activities on Return on Equity
(ROE) and Return on Assets (ROA) in Nigerian companies. The results indicate that CSR has a
positive and significant relationship with financial performance measures.
Babalola (2012) examined the relationship between corporate social responsibility and
firms’ profitability in Nigeria. The result showed that the explanatory variable account for
changes or variations in selected firms’ performance is caused by changes in corporate social
responsibility (CSR) in Nigeria.
Korathotage (2012) investigated Corporate Social Responsibility and Company
Performance: Evidence from Sri Lanka, He developed a CSR framework to identify CSR
practices in companies, in developing this CSR framework, he made use of the iterative Delphi
method, in the first round interviewing and in the second surveying expert and knowledgeable
people about CSR practices. The survey was developed to confirm and refine the important
identification information from the interview data. The qualitative data were then analysed using
a content analysis research technique, which identified 28 activities for the potential CSR
framework consequently, the quantitative data were employed in the panel data regression model
using E-Views software to scientifically analyse the data to identify the significant relationship
between these two variables. The results indicated that there is a significant relationship between
CSR and CP
Mulyadi and Anwar (2012) examined the relationship between corporate social
responsibility and profitability and firm value. They used several variables to measure firm value
and profitability, such as leverage. They concluded that there is no significant relationship
between leverage and firm value.
Wong (2012) investigated on the development of CSR in China over the past few years
and measure the effects of CSR on firm performance by examining the standalone CSR reports
for the period 2008-2009. The latest data indicate that Chinese companies have been making
progress in their CSR practices. The results of this study show that the prior financial

32
performance is positively associated with CSR disclosure and the CSR disclosure has a
significant and positive effect on the firm financial performance in the next year.
Servaes and Tamayo (2013) argued that corporate social responsibility (CSR) and firm
value are positively related to firms having high customer awareness using the proxy of
advertising expenditures. For firms with poor customer awareness, the relation is either negative
or insignificant. In addition, they found that the effect of awareness on the firm value-CSR
relationship is reversed for firms with a poor prior reputation as corporate citizens.
Abdelkbir and Faiçal (2015) examined corporate social responsibility and financial
performance. He adopted econometrics of panel data to analyse the influence of corporate social
responsibility (CSR) on the financial performance measured by several indicators. The data was
gathered from a sample of 20 firms listed on the stock exchange of Casablanca between 2007
and 2010. And concluded that the research found a negative and significant impact of the CSR
on financial performance.
Mawih, Shaker and Syed (2015) investigated and analyze the effects of corporate
citizenship activities on the financial performance and market performance of Omani
manufacturing companies in the Sultanate of Oman for the period 2009-2013. The Financial
performance of companies is measured by two independent variables: return on assets (ROA)
and return on equity (ROE). Market performance is measured by the fair market value of shares
(FMV). CCAs are determined by the voluntary disclosures of corporate citizenship activities by
the companies. The study concludes that there is a positive impact by CCAs on the financial and
market performance of the Omani companies that leads to profit maximization.
Song, Qiang, and Xing (2016) investigated the relationship between CSR and firm
performance, using a sample of 56 listed companies from food and beverage industry in China
(2009-2014). The results show that the good performance of corporate social responsibility can
have a positive impact on financial performance and corporate value, so corporate social
responsibility will increase corporate performance.
Christopher (2017) carried out a study to examine the impact of corporate social
responsibility on financial performance. This study used multiple linear regression to assess the
relationship between key indicators of corporate social responsibility and financial performance
from 372 corporations in the S&P500 in 2014. The theoretical foundation was Freeman’s
stakeholder theory. Environment, community, human rights, diversity, employee relations,

33
product quality, and small and medium scale enterprises were measures of social performance.
Return on assets was used to measure financial performance. When corporate social
responsibility was evaluated as an aggregate variable, a significant and negative relationship was
found in the financial and material sectors. When corporate social responsibility variables were
evaluated independently, employee relations and product quality in the healthcare sector, and
community in the financial sector, were found to be positively significant. Environment, product
quality, and small and medium scale enterprises in the financial sector, and employee relations in
the consumer and energy sectors, were found to be negatively significant. The study revealed
that the relationship between some social variables and financial performance are significant, but
not always in a positive direction.
Amidu, et al., (2017) evaluated the impact of CSR disclosure (CSRdisc) on the financial
performance of firms in Africa for both short and long terms. 158 listed companies were selected
from six African countries (South Africa, Kenya, Nigeria, Morocco, Egypt and Mauritius) and
grouped into six industries. They measured CSR in terms of keywords count (content analysis)
referred to this as CSRdisc. And employed accounting based to measure financial performance
of firms (return on assets [ROA] for short-term, and return on equity [ROE] for long term).
Multiple linear regression analysis was done with a sample of panel data for a period of 11 years
(2005-2015). With respect to long-term (ROE) financial performance, majority of our results
suggest positive but no significant economic benefits for the firms. Although there is positive
relationship between CSRdisc and financial performance of some firms in the long-run, the
financial performance of firms in Africa does not depend significantly on their CSR practices but
rather on other factors, such as their previous performance, leverage, volume of capital, and size.
Ejo-Orusa and Gabriel (2018) investigated the impact of organizational citizenship
behaviour on corporate performance in the selected telecommunication firms operating in Port
Harcourt, Rivers State. He also investigated the relationship between some dimensions of
organizational citizenship behaviour and measures of corporate performance. A cross-sectional
survey approach was used and quantitative method of analysis adopted. Techniques for data
analysis used were Spearman’s Correlation Coefficient, Cronbach Reliability Coefficient and
(IBM) SPSS. Copies of questionnaire were distributed to the appropriate respondents and data
for the research elicited. The population of the study is 64 management personnel of
telecommunication industry operating in Port Harcourt who know what citizenship behaviours

34
and their potential outcome entail. The sample size of the study is 62 being the number of
management personnel who received copies of questionnaire. The result showed that the
relationship between organizational citizenship behaviour and corporate performance is
significant at 95% confidence interval. Conclusions drawn from the study is that majority of the
selected telecommunication firms in Port Harcourt currently having employees who exhibit
citizenship behaviour in their organization.
Akinleye, et al., (2018) investigated the causal relationship among corporate social
responsibility (CSR), profit after tax and return on assets of selected quoted multinational
companies in Nigeria. The data gathered from the financial statements of the selected quoted
multinational companies were analysed using granger causality technique. The result revealed
that there was no direction causality between profit after tax and corporate social responsibility
as well as the return on assets and corporate social responsibility of the selected multinational
companies with estimated probability values ranging from 0.065 to 0.999 ˃ 0.05. Based on the
findings, the study concluded that profit after tax and returns on assets of the selected
multinational companies do not granger cause corporate social responsibility or vice visa. This
study established that, despite the huge investment and profit made by the selected multinational
companies in Nigeria, there was no significant contribution towards the corporate social
responsibility of the nation or hosting communities.
Abilasha and Madhu (2019) examined the effectiveness of New Companies Act, 2013
with respect to CSR and examine its impact on financial performance of selected 10 Indian
companies which was measured by financial ratios such as Profit before tax, return on capital
employed, Return on Equity and Return on Asset. The study is purely based on secondary
sources collected from Companies Annual Report and Sustainability Report for four years 2014-
17. The result showed that in an average all companies are contributing 2% towards CSR
activities which was an prescribe percentage as per New Companies Act, 2013 under Section
135, in which Ambuja Cement is contributing more towards CSR activities. It also revealed that
impact of CSR on overall company’s financial performance is significantly positive with respect
to financial ratios like PBT, ROC, ROE and ROA but individually insignificant. When CSR
contribution increases, the company’s financial performance also increases and vice-versa.
Further, the trends of CSR contribution in all selected companies is increasing which depicts the
success of Section 135 with respect to CSR as per new Companies Act, 2013.

35
 Mohammed and Hamid (2019) examine the impact of corporate social responsibility on
financial performance of listed non-financial services companies in Nigeria. The study used ex-
post factor research design and utilized secondary data collected from the annual report and
accounts of twenty three (23) sampled listed non-financial services companies in Nigeria for a
period of 10 years (2008-2017). The sample of the study was arrived at using census sampling
technique in which all the elements of the population were used for the study. The data were
analyzed using descriptive statistics, correlation and regression analysis (GLS Fixed Effect) with
the aid of Stata Version 14.0. Robustness tests, namely multicollinearity, heteroscedasticity,
normality of residuals, Hausman specification and F-Test were conducted to validate the results.
The finding of the study reveals that CSR has significant positive impact on financial
performance. The study concludes that financial performance of listed companies in Nigeria can
be enhanced through engaging in socially responsible investments.

Elif (2019) investigated the impact of corporate social responsibility (CSR) engagement
on firm financial performance in a developing country, Turkey, and also analyzed the
moderating role of ownership concentration in the CSR–financial performance relationship. The
sample consisted of non-financial public firms listed on the Borsa Istanbul (BIST)-100 index and
covers the period between 2014 and 2018. Empirical results using an instrumental variable
approach show that corporate social responsibility has a positive relationship with financial
performance. Furthermore, findings indicate that this relationship is negatively moderated by
ownership concentration even when endogeneity is controlled
2.5 Gaps in literature

Most of these studies discussed the relationship between corporate social responsibility
and variables such of financial performance as indicators (profit, cost of capital and market
value), the loyalty of customers, productivity, and so on. Yet no study has considered the effect
of CSR on the financial performance of firm using Tobin Q. Furthermore, it has been observed
that most of the reviewed studies have been carried out outside Nigeria which calls for the need
of more studies in this area especially using Nigeria firms. According to these reviewed studies,
not much work have been done on CSR and financial performance of listed firm in Nigeria even
though Akinleye, Faustina, and Akinleye (2018) investigated the causal relationship among
corporate social responsibility (CSR), profit after tax and return on assets of selected quoted

36
multinational companies in Nigeria but their study only considered the listed multinational firms
and limited to listed firms that are not multinational which this study is going to address.

37
 CHAPTER THREE

METHODOLOGY

This chapter presents the method, the procedure, the modalities and sequential steps that
was adopted in this research work to ensure that the result of the investigation is dependable,
accurate and valid. It also presents a careful description of the research design, target population,
sample and sample techniques, resources and data collection, techniques of data analysis as well
as the variable measurement to model specification.
3.1 Research Design
This study adopted the ex-post facto research design which forms part of quasi-
experimental design to assess the relationship between corporate social responsibility and firm
financial performance of listed companies in Nigeria stock exchange. The choice of this
research design is based on the premise that the study involved gathering data which were
already in existence and which have not been created by the researcher.

3.2 Source of Data

Data were collected through secondary sources. The data were sourced from the annual reports
of the sampled selected firms in Nigeria Exchange Group (NGX) fact book for the period 2017-
2021 covered in the study. This source was used in order to obtain quantitative information on
the variables that exist in the model developed in this study.
3.3 Population of the Study

The population of this study comprises of 76 listed companies on the Nigeria exchange
group as at 31st December 2021. The population was chosen to ease this study base on inability
to access sufficient data.
3.3 Sample size and Sampling Technique
A sample of twenty (20) firms was purposively selected based on the availability of their annual
reports. The final sample, therefore, consisted of (20) firms for a five-year period, covering
2017-2021.

38
3.4 Data collection Instrument
This study will be collecting published data from annual reports and accounts of selected
firms from the Nigerian Stock Exchange.
3.5 Model specification
With respect to the main objective of this study, which was to assess the relationship between
corporate social responsibility and financial performance of some quoted companies in Nigeria
stock Exchange, the model below was developed for the study;
FP = f(CSR)
ROA= α + β1CSR+ ε ……………3.1
ROE= α + β1CSR + ε ……………3.2
TOBQ= α + β1CSR+ ε …………….3.3
Where:
CSR = corporate social responsibility
ROA = return on assets
ROE = return on equity
TOB Q= Tobin Q
α = constant of the regression
ε = Residual (error) term
β=coefficient

3.6 Measurement of variable.

S/ VARIABLES DEFINITION TYPES MESUREMENT
N
1 CSR Corporate Social Independent Using CSR disclosure index
responsibility
2 ROA Return on assets Dependent Firm profit before interest and tax
divided by firm total assets
3 ROE Return on equity Dependent Firm’s Profit after tax divided by
their total equity

4 TOBQ Tobin Q Dependent measured using the market value of

the firm equity divided the book value
of the assets

Source: Researcher’s Computation 2023

39
3.7 Data Analysis Techniques

This study will be using the correlation data techniques and the regression analysis is
testing the listed above variables. The reason was that these techniques will help to know and test
the effect of the dependent variables against the independent variables and to show the degree of
relationship between the aforementioned variables in this study.

40
 CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS
This chapter analyses and interprets the results obtained for the study. The chapter begins
with descriptive statistics and correlation matrix. It then presents the regression results and
discusses the findings in light of previous studies. The chapter concludes with highlight of the
policy implications of the findings.
4.1 Descriptive Statistics
The summary of the descriptive statistics of the variables are presented in table 4.1. The full
results are contained in the appendix.
Table 4.1.1 presents the descriptive statistics for the dependent and explanatory variables. From
the table, corporate social responsibility has minimum and maximum values of 0.000 and 0.8000
respectively and the mean value of 0.625000 as well as the standard deviation value of 0.286606.
The standard deviation of 0.286606 signifies that the data deviate from the mean value from both
sides by 0.286606 implying that there is a wide dispersion of the data from the mean because
standard deviation is lower than the mean value.
The table also shows that the mean of the return on assets of the sampled mean firms is
0.137415 with standard deviation of 0.115192, and minimum and maximum values of 0.007163
and 0.375490 respectively. This implies that the performance of the firms in terms of return on
assets of corporate social responsibility is on average 0.115192, and the standard deviation value
indicates that the total return on assets of the sampled firms deviates from the mean value from
both sides by 0.137415, implying that there is significant dispersion of the data from the mean
because the standard deviation is higher.
Moreover, the table shows that the mean of the return on equity mean of the firms is
0.176447 with standard deviation of 0.143697. The minimum and maximum values are 0.008255
and 0.417586 respectively. This implies that return on equity of the sampled firms is on average
0.143697, and the standard deviation value indicates that the value deviates from the mean from
both sides by 0.176447, implying that there is significant dispersion of the data from the mean
because the standard deviation is better.
Finally, the table portrays that the TobinQ has an average value of 1.035975 with
standard deviation of 0.520678. The minimum and maximum values are 0.515829 and 2.253030
respectively. The standard deviation indicates that the value of TobinQ of the firms deviates

41
from the mean value from dependent side and independent side by 0.520678. This further
implies that there is widely dispersed data from the mean because the standard deviation is small.
Table 4.1 Descriptive Statistics
Variables Min. Max. Mean Std. Dev.
CSR 0.000000 0.800000 0.625000 0.286606
ROA 0.007163 0.375490 0.137415 0.115192
ROE 0.008255 0.417586 0.176447 0.143697
TOBINQ 0.515829 2.253030 1.035975 0.520678
Source: Researchers Computation, 2023
4.2 Test of Variables
4.2.1 Correlation Matrix of Dependent and Independent Variables
Table 4.2 reveals that corporate social responsibility of the firms are positively and strongly
correlated with Tobin Q. The values of 0.319251 and 0.195318 of the variables indicated p-
values of 0.000165 and 0.0078 that are all significant at 1% respectively. Also, corporate social
responsibility has a positive relationship with firm’s return on assets (ROA).
The relationship of the variables among themselves indicates that return on equity and
corporate social responsibility are positively correlated among themselves. On the other hand,
the relationship between return on assets and corporate social responsibility, Tobin Q and
corporate citizen are positively related among themselves. Although some of the variables
exhibited strong association with overall relationship for the independent variables among
themselves. This shows that there is no multicollinearity among the explanatory or exogenous
variables of the study.
The correlation matrix explains the degree of relationship between the dependent and
independent variables of the study as well as the independent variables among themselves. The
summary of the associations among the variables of the study is presented in table 4.2, while the
full result is attached as appendix.

42
Table 4.2. Correlation Analysis of Study Variables 
Variables CSR ROA ROE TOBINQ
CSR 1
0.319251**
ROA 1
(0.000165)
0.391105** 0.846299***
ROE  1
(0.000920) (0.0016)
0.195318** 0.881473*** 0.995305***
TOBINQ 1
(0.007826) (0.0030) (0.0011)
Source: Researchers’ Computation (2023)

4.2.3 Multicollinearity Test

Multicollinearity test are part of post estimation test to confirm the validity of the assumption of
the regression model. In a situation where two or more explanatory variables are highly
correlated, meaning that one can linearly predict the other variable with a certain degree of
accuracy, then there is the problem of multicollinearity. The variance inflation factor test is built
to test multicollinearity in this analysis. The variance inflation factor (VIF) explains how often
the variance of a regressor calculation was distorted due to collinearity with the other regressors.
Essentially, VIFs over 10 are known to be a source of alarm, no variables have more than 10 VIF
values and therefore no variables have been found to have a serious sign of multicollinearity.

Table 4.3: Tolerance and VIF Value

Variable Tolerance VIF

ROE .931 1.040

ROA .921 1.077

TOBQ .973 1.102

Source: Researchers’ Computation (2023)

43
4.2.4 Panel Unit Root Test of the Variables

Table 4.3.1 shows that the functional relationship between the dependent and
independent variables is ROA = 0.618418+ 0.647899 CSR. Table 4.3 result shows that there is
posia tive relationship between corporate social responsibility and return on asssets which shows
that 1% increase in corporacitizenszen will lead to 64% increase in return of asset. The
relationship between corporate social responsibility programs implemented by multinational
companies and intangible assets is very high. This highest relationship can bring about tangible
assets that will help sample companies overcome nationalistic barriers, facilitate globalization,
and outcompete local rivals. The above result agreed with the Abilasha and Madhu (2019),
effectiveness of New Companies Act, 2013 with respect to CSR and examine its impact on
financial performance of selected 10 Indian companies which reveal significantly positive with
respect to financial ratios like PBT, ROC, ROE and ROA but in contrast with Akinleye,
Faustina, and Akinleye (2018) who reported no direction causality between return on assets and
corporate social responsibility of the selected multinational companies with estimated probability
values ranging from 0.065 to 0.999 ˃ 0.05.
Table 4.4 Panel Unit Root Test

Variable Coefficient Std. Error t-Statistic Prob.  

C 0.762639 0.036845 16.78432 0.0000

CSR 0.780099 0.210996 3.07066 0.0002
Random Effects (Cross)
Weighted Statistics

R-squared 0.750371    Mean dependent var 0.225000

Adjusted R-squared 0.605956    S.D. dependent var 0.168937
S.E. of regression 0.269737    Sum squared resid 11.49574
F-statistic 3.058579    Durbin-Watson stat 1.956709
Prob(F-statistic) 0.000070

Source: Researchers’ Computation (2023)

44
Table 4.4 shows that the functional relationship between the dependent and independent
variables is ROE = 0.762639+ 0.780062CSR.
The relationship between corporate social responsibility and return on equity (ROE)
show a positive relationship which is direct relationship. That is, 1% increase in CSR will lead to
78% increase on return on equity. This is in tandem with Servaes and Tamayo (2013) who
examined corporate social responsibility (CSR) and firm value and the study showed that the
financial performance is positively associated with CSR disclosure and the CSR disclosure has a
significant and positive effect on the firm financial performance, but in contrast with Abdelkbir
and Faiçal (2015) who examined Corporate social responsibility and financial performance and
found a negative and significant impact of the CSR on financial performance.

Table 4.4 shows that the functional relationship between the dependent and independent
variables is: TOBIN Q = 0.513620 + 0.107513CSR
The above result shows that there is significant relationship between corporate social
responsibility and Tobin Q which further shows that there is positive relationship. This means
that 1% increase in corporate social responsibility will lead to 10% increase in Tobin Q. Firms
displaying Tobin’s Q greater than unity are considered to be using scarce resources effectively,
while those with Tobin’s Q less than unity are using resources poorly. This is in tandem with Elif
(2019) and Setiawan and Janet (2011) who argued that there is a relationship between corporate
social responsibility, financial performance, and market performance.
4.5 Fixed-Effects Regression

Variable Coefficient Std. Error t-Statistic Prob.  

C 0.618418 0.036845 16.78432 0.0000

ROA 0.780062 0.210996 3.07066 0.0002
ROE 0.834236 0.231543 3.602942 0.0002
Tobin Q 0.107513 0.010996 9.77746 0.0000
Random Effects (Cross)
Weighted Statistics

R-squared 0.750371    Mean dependent var 0.225000

Adjusted R-squared 0.605956    S.D. dependent var 0.168937
S.E. of regression 0.269737    Sum squared resid 11.49574
F-statistic 3.058579    Durbin-Watson stat 1.956709
Prob(F-statistic) 0.000070

45
4.3 Evaluate the effect of corporate social responsibility (CSR) on firm’s return on
assets (ROA)
Table 4.5 result shows that there is positive relationship between corporate social
responsibility and return on asset which shows that 1% increase in corporate social responsibility
will lead to 64% increase in return on asset. The relationship between CSR programs
implemented by multinational companies and intangible assets is very high. This highest
relationship can bring about tangible assets that will help sample companies overcome
nationalistic barriers, facilitate globalization, and outcompete local rivals. The above result
agreed with the Abilasha and Madhu (2019), effectiveness of New Companies Act, 2013 with
respect to CSR and examine its impact on financial performance of selected 10 Indian companies
which reveal significantly positive with respect to financial ratios like PBT, ROC, ROE and
ROA but in contrast with Akinleye, Faustina, and Akinleye (2018) who reported no direction
causality between return on assets and corporate social responsibility of the selected
multinational companies with estimated probability values ranging from 0.780062 to 0.999 ˃
0.05.
Table 4.6 Panel on Corporate Social Responsibility (CSR) on firm’s Return on Assets
(ROA)

Variable Coefficient Std. Error t-Statistic Prob.  

C 0.762639 0.036845 20.69857 0.0000

ROA 0.780062 0.210996 3.07066 0.0002
Random Effects (Cross)
Weighted Statistics

R-squared 0.750371    Mean dependent var 0.225000

Adjusted R-squared 0.605956    S.D. dependent var 0.168937
S.E. of regression 0.269737    Sum squared resid 11.49574
F-statistic 3.058579    Durbin-Watson stat 1.956709
Prob(F-statistic) 0.000070

Source: Researchers’ Computation (2023)

46
4.3.1 Assess the extent to which corporate social responsibility (CSR) affect firm’s return
on equity (ROE)
Table 4.6 also revealed that the relationship between corporate social responsibility and
return on equity (ROE) show a positive relationship which is direct relationship. That is, 1%
increase in CSR will lead to 78% increase on return on equity. This can be seen from the value of
the beta coefficient of 0.83423 with p-value of 0.000 indicating that the p-value is statistically
significant. This implies that there is significant relationship between corporate social
responsibility and firm’s return on equity (ROE). The result has sufficient evidence to reject the
second hypothesis, which states that there is no significant relationship between corporate social
responsibility and firm’s return on equity (ROE). This is in tandem with Mawih, Shaker and
Syed (2015) who investigated and analyze the effects of corporate citizenship activities on the
financial performance and market performance of Omani manufacturing companies in the
Sultanate of Oman for the period 2009-2013 and concluded that there is a positive impact by
CCAs on the financial and market performance of the Omani companies that leads to profit
maximization and in contrast with Abdelkbir and Faiçal (2015) who examined Corporate social
responsibility and financial performance and found a negative and significant impact of the CSR
on financial performance.

Table 4.7 Panel on corporate social responsibility (CSR) affect firm’s return on equity
(ROE)

Variable Coefficient Std. Error t-Statistic Prob.  

C 0.835261 0.289123 2.888946 0.0012

ROE 0.834236 0.231543 3.602942 0.0002
Random Effects (Cross)
Weighted Statistics
R-squared 0.750371    Mean dependent var 0.225000
Adjusted R-squared 0.605956    S.D. dependent var 0.168937
S.E. of regression 0.269737    Sum squared resid 11.49574
F-statistic 3.058579    Durbin-Watson stat 1.956709
Prob(F-statistic) 0.000070

Source: Researchers’ Computation (2023)

47
4.3.2 Ascertain the effect of corporate social responsibility (CSR) on firm’s Tobin Q
Table 4.7 revealed a value of beta coefficient of 0.107513 with p-value of 0.000 for
citizenship and firm’s Tobin Q. This implies that there is a significant relationship between
Tobin Q and corporate social responsibility which further shows that there is positive
relationship which indicated that 1% increase in corporate citizen will lead to 10% increase in
Tobin Q. This is in tandem with Elif (2019) and Setiawan and Janet (2011) who argued that there
is a relationship between corporate social responsibility, financial performance, and market
performance.
In tandem with the findings of this study, Amidu, Liu and Sesay (2017) evaluated the
impact of CSR disclosure (CSRdisc) on the financial performance of firms in Africa for both
short and long terms. 158 listed companies were selected from six African countries (South
Africa, Kenya, Nigeria, Morocco, Egypt and Mauritius) and grouped into six industries. They
measured CSR in terms of keywords count (content analysis) referred to this as CSRdisc. And
employed accounting based to measure financial performance of firms (return on assets [ROA]
for short-term, and return on equity [ROE] for long term). Additionally, Multiple linear
regression analysis was done with a sample of panel data for a period of 11 years (2005-2015).
With respect to long-term (ROE) financial performance, majority of our results suggest positive
but no significant economic benefits for the firms. Although there is positive relationship
between CSRdisc and financial performance of some firms in the long-run, the financial
performance of firms in Africa does not depend significantly on their CSR practices but rather on
other factors, such as their previous performance, leverage, volume of capital, and size.
Likewise, Abilasha and Madhu (2019) examined the effectiveness of New Companies Act, 2013
with respect to CSR and examine its impact on financial performance of selected 10 Indian
companies which was measured by financial ratios such as Profit before tax, return on capital
employed, Return on Equity and Return on Asset.
The study is purely based on secondary sources collected from Companies Annual Report
and Sustainability Report for four years 2014-17. The result showed that in an average all
companies are contributing 2% towards CSR activities which was an prescribe percentage as per
New Companies Act, 2013 under Section 135, in which Ambuja Cement is contributing more
towards CSR activities. It also revealed that impact of CSR on overall company’s financial
performance is significantly positive with respect to financial ratios like PBT, ROC, ROE and

48
ROA but individually insignificant. When CSR contribution increases, the company’s financial
performance also increases and vice-versa. Further, the trends of CSR contribution in all selected
companies is increasing which depicts the success of Section 135 with respect to CSR as per new
Companies Act, 2013.
This is in contrast with the study of Akinleye, Faustina, and Akinleye (2018) investigated
the causal relationship among corporate social responsibility (CSR), profit after tax and return on
assets of selected quoted multinational companies in Nigeria. The data gathered from the
financial statements of the selected quoted multinational companies were analysed using granger
causality technique. The result revealed that there was no direction causality between profit after
tax and corporate social responsibility as well as the return on assets and corporate social
responsibility of the selected multinational companies with estimated probability values ranging
from 0.065 to 0.999 ˃ 0.05. Based on the findings, the study concluded that profit after tax and
return on assets of the selected multinational companies do not granger cause corporate social
responsibility or vice visa. This study established that, despite the huge investment and profit
made by the selected multinational companies in Nigeria, there was no significant contribution
towards the corporate social responsibility of the nation or hosting communities.
Table 4.8 Panel on Corporate Social Responsibility (CSR) on firm’s Tobin Q

Variable Coefficient Std. Error t-Statistic Prob.  

C 0.513620 0.036845 13.94001 0.0000

Tobin Q 0.107513 0.010996 9.77746 0.0000
Random Effects (Cross)
Weighted Statistics

R-squared 0.750371    Mean dependent var 0.225000

Adjusted R-squared 0.605956    S.D. dependent var 0.168937
S.E. of regression 0.269737    Sum squared resid 11.49574
F-statistic 3.058579    Durbin-Watson stat 1.956709
Prob(F-statistic) 0.000070

Source: Researchers’ Computation (2023)

49
 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

This chapter discusses the summary of the study, followed by the conclusion of the
research findings in relation to the study, recommendations; contribution to knowledge was
also suggested by the researcher.
5.1. Summary

The study examines corporate social responsibility's effect on financial performance in

Nigeria. It specifically evaluates the effect of corporate social responsibility (CSR) on firm’s
return on assets (ROA); assesses the extent to which corporate social responsibility (CSR) affects
firm’s return on equity (ROE); assesses the extent to which corporate social responsibility (CSR)
affect firm’s Tobin’ Q.

The study explains relevant concepts in chapter two. The concept includes corporate
social responsibility and financial performance. Related empirical studies were reviewed and the
theoretical aspect of the study. However, the study utilized a combination of two theories but the
study was anchored on shareholders theory.

Secondary data was used to achieve the objective of the study. The study population
comprises 20 listed firms in the Nigeria exchange group (NGX) as of 31st of December 2021 for
the period of (10) years from 2017 to 2021. The judgmental sampling technique was chosen
being the fact that only 20 listed firm was selected out of the 76 firms in the population studied.
Data were collected for the period 2017-2021. These were obtained from the annual reports of
selected listed firms. The collected data were analyze using the mean, standard deviation,
skewness and kurtosis and inferential statistics and the result was presented in a table. For the
purpose of empirical analysis, the study used regression statistical tool to analyze each specific
objectives of the study using E-view as the statistical package for analysis.

The following findings were revealed in the study:

i. In references to the first objective, it was revealed that there is a significant relationship
between corporate social responsibility and a firm’s return on assets (ROA).
ii. Findings show that there is a significant relationship between corporate social
responsibility and a firm’s return on equity (ROE).

50
 iii. Findings show that there is a significant relationship between corporate social
responsibility and the firm’s Tobin Q.
5.2. Conclusion

Corporate organizations listed or quoted in the Nigerian Stock Exchange (NSE) have
their future lying in effective corporate social responsibility. This is so because the success or
failure of a firm also lies on how well their social responsibilities are being performed. Hence, by
putting a sound corporate social responsibility practice in place the firm is able to improve its
financial performance and allocate resources efficiently. Hence, this study reveals that corporate
social responsibility has a positive and significant influence on firm’s financial performance
(ROA, ROE and Tobin Q), this means that corporate social responsibility has great effect on the
firm’s financial performance

5.3 Recommendations

Against the backdrop of the findings, the following recommendations were made

i. Government should enforce laws on institutions that fail to adhere to corporate social
responsibility implementations.
ii. Government should have shares in most of these listed companies as it will give them the
absolute right to monitor and enforce the implementation of corporate social
responsibility and it disclosure
iii. Though corporate social responsibility is in its infancy stage but effective and efficient
sensitization on its benefits should be made available at all levels and government should
give technical support to institutions that practices citizenship

51
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 APPENDIX II

Dependent Variable: ROA

Method: Pooled EGLS (Cross-section random effects)

Date: 28/02/23 Time: 03:14

Sample: 2017 2021

Included observations: 5

Cross-sections included: 20

Total pool (balanced) observations: 100

Swamy and Arora estimator of component variances

Variable Coefficient Std. Error t-Statistic Prob.  

C 0.618418 0.036845 16.78432 0.0000

ROA 0.647899 0.210996 3.07066 0.0002

Random Effects (Cross)

BERGER PAINTS--C
0.340000
BETA GLASS--C
0.350000
CADBURY NIG--C
0.230000
CAP PLC--C
0.430000
CHAMPION BREWERIES--C
0.400000
CUTIX--C
0.300000
DANGOTE CEMENT--C
0.500000
DANGOTE FLOUR MILLS--C
0.400000
FLOUR MILLS OF NIGERIA--C
0.000000
GOLDEN GUINEA BREWERIES--
C 0.000000
GUINNESS NIG--C
0.000000
HONYWELL FLOUR MILL--C
0.000000
INTERNATIONAL BREWERIES--
C 0.000000
LARFARGE AFRICA--C
0.000000

58
 NASCON ALLIED--C
0.000000
NESTLE NIG--C
0.000000
PREMIER PAINTS--C
0.000000
PZ CUSSION--C
0.000000
UNILEVER --C
0.000000
VITAFOAM--C
0.000000

Effects Specification

S.D.   Rho  

Cross-section random 0.000000 0.0000

Idiosyncratic random 0.287582 1.0000

Weighted Statistics

R-squared 0.750371    Mean dependent var 0.225000

Adjusted R-squared 0.605956    S.D. dependent var 0.168937

S.E. of regression 0.269737    Sum squared resid 11.49574

F-statistic 3.058579    Durbin-Watson stat 1.956709

Prob(F-statistic) 0.000070

Unweighted Statistics

R-squared 0.750371    Mean dependent var 0.625000

Sum squared resid 11.49574    Durbin-Watson stat 1.956709

Dependent Variable: ROE

Method: Pooled EGLS (Cross-section random effects)
Date: 28/02/23 Time: 03:14
Sample: 2017 2021
Included observations: 5
Cross-sections included: 20
Total pool (balanced) observations: 100
Swamy and Arora estimator of component variances

Variable Coefficient Std. Error t-Statistic Prob.  

59
 C 0.762639 0.034536 22.08264 0.0000
ROE 0.780062 0.155697 5.010131 0.0000
Random Effects (Cross)
BERGER PAINTS--C 0.000000
BETA GLASS--C 0.000000
CADBURY NIG--C 0.000000
CAP PLC--C 0.000000
CHAMPION BREWERIES--C 0.000000
CUTIX--C 0.000000
DANGOTE CEMENT--C 0.000000
DANGOTE FLOUR MILLS--C 0.000000
FLOUR MILLS OF NIGERIA--C 0.000000
GOLDEN GUINEA BREWERIES--C 0.000000
GUINNESS NIG--C 0.000000
HONYWELL FLOUR MILL--C 0.000000
INTERNATIONAL BREWERIES--C 0.000000
LARFARGE AFRICA--C 0.000000
NASCON ALLIED--C 0.000000
NESTLE NIG--C 0.000000
PREMIER PAINTS--C 0.000000
PZ CUSSION--C 0.000000
UNILEVER --C 0.000000
VITAFOAM--C 0.000000

Effects Specification
S.D.   Rho  

Cross-section random 0.000000 0.0000

Idiosyncratic random 0.264724 1.0000

Weighted Statistics

R-squared 0.652963    Mean dependent var 0.625000

Adjusted R-squared 0.547602    S.D. dependent var 0.268937
S.E. of regression 0.248297    Sum squared resid 9.740928
F-statistic 28.53254    Durbin-Watson stat 1.679383
Prob(F-statistic) 0.000000

Unweighted Statistics

R-squared 0.152963    Mean dependent var 0.625000

Sum squared resid 9.740928    Durbin-Watson stat 2.679383

Dependent Variable: TOBINQ

Method: Pooled EGLS (Cross-section random effects)

Date: 28/02/23 Time: 03:14

Sample: 2017 2021

60
Included observations: 5

Cross-sections included: 20

Total pool (balanced) observations: 100

Swamy and Arora estimator of component variances

Variable Coefficient Std. Error t-Statistic Prob.  

C 0.513620 0.052417 9.798667 0.0000

TOBINQ 0.107513 0.045789 2.347993 0.0201

Random Effects (Cross)

BERGER PAINTS--C
0.000000
BETA GLASS--C
0.000000
CADBURY NIG--C
0.000000
CAP PLC--C
0.000000
CHAMPION BREWERIES--C
0.000000
CUTIX--C
0.000000
DANGOTE CEMENT--C
0.000000
DANGOTE FLOUR MILLS--C
0.000000
FLOUR MILLS OF NIGERIA--C
0.000000
GOLDEN GUINEA BREWERIES--
C 0.000000
GUINNESS NIG--C
0.000000
HONYWELL FLOUR MILL--C
0.000000
INTERNATIONAL BREWERIES--C
0.000000
LARFARGE AFRICA--C
0.000000
NASCON ALLIED--C
0.000000
NESTLE NIG--C
0.000000
PREMIER PAINTS--C
0.000000
PZ CUSSION--C
0.000000
UNILEVER --C
0.000000

61
 VITAFOAM--C
0.000000

Effects Specification

S.D.   Rho  

Cross-section random 0.000000 0.0000

Idiosyncratic random 0.282095 1.0000

Weighted Statistics

R-squared 0.738149    Mean dependent var 0.625000

Adjusted R-squared 0.632062    S.D. dependent var 0.268937

S.E. of regression 0.264590    Sum squared resid 11.06128

F-statistic 6.266655    Durbin-Watson stat 2.005589

Prob(F-statistic) 0.000019

Unweighted Statistics

R-squared 0.738149    Mean dependent var 0.625000

Sum squared resid 11.06128    Durbin-Watson stat 2.005589

62