Corporate Social Responsibility and Financial Performance of Deposit Money Banks: A new Evidence from Nigeria

  • Authors

    • Oluyinka Isaiah Ogungbade Afe Babalola University Ado-Ekiti
    2020-12-25
    https://doi.org/10.14419/ijaes.v9i1.31249
  • Corporate Social Responsibility, Community Development, Educations, Financial Performance, Health.
  • The primary purpose of every business firm is to make a profit which is the economic performance in the Triple Bottom Line. However, a social and environmental performance which is Corporate Social Responsibility (CSR) has been argued to be very crucial for firms' sustainability. This argument has drawn the attention of researchers across the globe to various empirical studies which have produced confounding results. This study provides new evidence from Nigeria by disaggregating CSR into Community Development, Education and Health, and finding their effect on performance which is proxied by Return on Assets. The data were extracted from the audited annual reports of 12 Deposit Money Banks listed on Nigeria Stock Exchange for ten years, 2009-2008. The study found out that CSR on Community Developments has a positive and significant effect on financial performance. On the contrary, the study reveals that CSR on Education has an insignificant positive effect on financial performance, and CSR on Health has a negligible negative effect. The study recommends that management of Deposit money banks in Nigeria should not blindly engage in CSR activities, but should selectively select the CSR activities that can take care of all the stakeholders’ interest.

     

  • References

    1. [1] Akben-Selcuk, E. (2019). Corporate social responsibility and financial performance: The moderating role of ownership concentration in Turkey. Sustainability (Switzerland), 11(13), 1.10. https://doi.org/10.3390/su11133643.

      [2] Akinleye, G. T., & Faustina, A. T. (2017). Impact of Corporate Social Responsibility on the Profitability of Multinational Companies in Nigeria. Global Journal of Management and Business Research: D Accounting and Auditing, 17(3), 27–35.

      [3] Alshammari, M. (2015). Corporate Social Responsibility and Firm Performance: The Moderating Role of Reputation and Institutional Investors. International Journal of Business and Management, 10(6), 15–28. https://doi.org/10.5539/ijbm.v10n6p15.

      [4] Brin, P., & Nehme, M. N. (2019). Corporate Social Responsibility: Analysis of Theories and Models. EUREKA: Social and Humanities, 5(5), 22–30. https://doi.org/10.21303/2504-5571.2019.001007.

      [5] Chang, Y., Chen, T.-H., & Min-Cheng, S. (2018). Corporate Social Responsibility, Corporate Performance, and Pay-Performance Sensitivity—Evidence from Shanghai Stock Exchange Social Responsibility Index. Emerging Markets, Finance & Trade; Abingdon, 54(5), 1183–1203. https://doi.org/10.1080/1540496X.2016.1273768.

      [6] Colbert, B. a, & Kurucz, E. C. (2007). Three Conceptions of Triple Bottom Line Business Sustainability and the Role for HRM. Human Resource Planning, 30(1), 21–29. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=24669027&site=ehost-live

      [7] Cornett, M. M., Erhemjamts, O., & Tehranian, H. (2014). Corporate Social Responsibility and Its Impact on Financial Performance: Investigation of the U.S. Commercial Banks. SSRN Electronic Journal, 39. https://doi.org/10.2139/ssrn.2333878.

      [8] Daubry, P. M. (2020). Corporate Social Responsibility and Organizational Performance of Oil Companies in Southern Nigeria. Walden University.

      [9] Elkington, J. (1998). Partnerships from cannibals with forks: The triple bottom line of 21st-century business. Environmental Quality Management, 8(1), 37–51. Retrieved from https://search.proquest.com/ https://doi.org/10.1002/tqem.3310080106.

      [10] Fauzi, H., & Idris, K. M. (2009). The Relationship of CSR and Financial Performance: New Evidence from Indonesian Companies. Issues In Social And Environmental Accounting, 3(1), 66. https://doi.org/10.22164/isea.v3i1.38.

      [11] Freeman, R., Harrison, J., & Zyglidopoulos, S. (2018). Stakeholder Theory: Concepts and Strategies (Elements in Organization Theory). https://doi.org/10.1017/9781108539500.

      [12] Freeman, R.E. (1984). Strategic management: A stakeholder approach. Boston: Pitman Publishing Inc.

      [13] Freeman, R Edward. (2016). A Stakeholder Theory of the Modern Corporation. The Corporation and Its Stakeholders, pp. 38–48. https://doi.org/10.3138/9781442673496-009.

      [14] Galant, A., & Cadez, S. (2017). Corporate social responsibility and financial performance relationship: A review of measurement approaches. Economic Research-Ekonomska Istrazivanja , 30(1), 676–693. https://doi.org/10.1080/1331677X.2017.1313122.

      [15] Gautam, R., Singh, A., & Bhowmick, D. (2016). Demystifying relationship between Corporate Social Responsibility (CSR) and financial performance: An Indian business perspective. Independent Journal of Management & Production, 7(4), 1034–1062. https://doi.org/10.14807/ijmp.v7i4.443.

      [16] Golrida, K. P., Subroto, B., Sutrisno, T., & Saraswati, E. (2018). The Complexity of Relationship between Corporate Social Responsibility (CSR) and Financial Performance. EMAJ: Emerging Markets Journal, 8(2), 19–25. https://doi.org/10.5195/emaj.2018.155.

      [17] Hopkins, M. (2014). What is CSR all about? ASPIRARE, 1(September), 1–21. Retrieved from https://www.researchgate.net/publication/272832575_What_is_CSR_all_about

      [18] Kang, C., Germann, F., & Grewal, R. (2016). Washing Away Your Sins? Corporate Social Responsibility, Corporate Social Irresponsibility, and Firm Performance. ..Journal of Marketing; Chicago, 80(2), 59. https://doi.org/10.1509/jm.15.0324.

      [19] Khan, M. T., Khan, N. A., Ahmed, S., & Ali, M. (2012). Corporate Social Responsibility ( CSR ) – Definition , Concepts and Scope ( A Review ). Universal Journal of Management and Social Sciences, 2(7), 41–52.

      [20] Khurshid, M. K., Shaheer, H., Nazir, N., Waqas, M., & Kashif, M. (2017). Impact of Corporate Social Responsibility on Financial Performance : The Role of Intellectual Capital. City University Research Journal, 247–263.

      [21] Kim, W. S., & Oh, S. (2019). Corporate social responsibility , business groups and financial performance : a study of listed Indian firms. Economic Research-Ekonomska Istraživanja, 32(1), 1777–1793. https://doi.org/10.1080/1331677X.2019.1637764.

      [22] Li, Y. (2018). The Impact of Corporate Social Responsibility on Corporate Performance - Evidence From Listed Companies in the Sports Industry in China. 7(4), 107–121. https://doi.org/10.5430/afr.v7n4p107.

      [23] Lin, C., Chang, R., & Dang, V. T. (2015). An Integrated Model to Explain How Corporate Social Responsibility Affects Corporate Financial Performance. Sustainability, 7, 8292–8311. https://doi.org/10.3390/su7078292.

      [24] Lv, P., Li, Y., & Mitra, D. (2020). CSR and performance of family businesses: A systematic review. Australasian Accounting, Business and Finance Journal, 14(3), 75–85. https://doi.org/10.14453/aabfj.v14i3.6.

      [25] Marrewijk, M. van. (2002). Concepts and Definitions of CSR and Corporate Sustainability - between agency and communion -. Entomologia Experimentalis et Applicata, 103(3), 239–248. https://doi.org/10.1023/A

      [26] MIKOÅAJEK-GOCEJNA, M. (2016). The relationship between corporate social responsibility and corporate financial performance: Evidence from empirical studies. Comparative Economic Research, 19(4), 66–84. https://doi.org/10.1515/cer-2016-0030.

      [27] Mishra, S., & Suar, D. (2010). Does corporate social responsibility influence firm performance of Indian companies? Journal of Business Ethics, 95(4), 571–601. https://doi.org/10.1007/s10551-010-0441-1.

      [28] Moore, M. (2019). CSR & Company Financial Performance. Western University. https://doi.org/10.2139/ssrn.3377842.

      [29] Nasieku, T., Togun, O. R., & Olubunmi, E. M. (2014). Corporate Social Responsibility and Organizational Performance : A Theoretical Review. International Journal of Humanities Social Sciences and Education (IJHSSE) Volume, 1(12), 106–114.

      [30] Nyeadi, J. D., Ibrahim, M., & Sare, Y. A. (2018). Corporate social responsibility and financial performance nexus: Empirical evidence from South African listed firms. Journal of Global Responsibility, 9(3), 301–328. https://doi.org/10.1108/JGR-01-2018-0004.

      [31] Rajput, N., Batra, G., & Pathak, R. (2012). Linking CSR and financial performance: An empirical validation. Problems and Perspectives in Management, 10(2), 42–49.

      [32] Sial, M. S., Chunmei, Z., Khan, T., & Nguyen, V. K. (2018). Corporate social responsibility, firm performance and the moderating effect of earnings management in Chinese firms. Asia-Pacific Journal of Business Administration, 10(2/3), 184–199. Retrieved from https://doi.org/10.1108/APJBA-03-2018-0051.

      [33] Siddiq, S., & Javed, S. (2012). The Impact of CSR on Organizational Performance. European Journal of Business and Management, 9(27), 40–46.

      [34] Sonnentag, S., & Frese, M. (2002). Performance Concepts and Performance Theory. In S. Sonnentag (Ed.), Psycological Management of Individual Performance (p. 26). https://doi.org/10.1002/0470013419.ch1.

      [35] Sulphey, M. M. (2017). Corporate Social Responsibility or Corporate Social Irresponsibility: where should be the focus?. Problems and Perspectives in Management, 15(4), 293–301. https://doi.org/293-301. https://doi.org/10.21511/ppm.15(4-1).2017.13.

      [36] Taouab, O., & Issor, Z. (2019). Firm Performance : Definition and Measurement Models. European Scientific Journal, 15(1), 93–106. https://doi.org/10.19044/esj.2019.v15n1p93.

      [37] Tijani, A. A., Adeoye, A. O., & Alaka, N. S. (2017). Effects of Corporate Social Responsibility on Banks Financial Performance in Nigeria : A Study of United Bank of Africa. International Journal of Business Economics and Management, 4(6), 136–147. https://doi.org/10.18488/journal.62.2017.46.136.147.

      [38] Wagle, S. (2020). Corporate Social Responsibility on Firms’ Financial Performance: Evidence of Banking Sectors of Nepal. Journal of Balkumari College, 9(1), 89–94. https://doi.org/10.3126/jbkc.v9i1.30091.

      [39] Walker, K., Zhang, Z., & Na (Nina), N. (2019). The Mirror Effect: Corporate Social Responsibility, Corporate Social Irresponsibility and Firm Performance in Coordinated Market Economies and Liberal Market Economies. British Journal of Management, 30(1), 151–168. https://doi.org/10.1111/1467-8551.12271.

      [40] Xie, X., & Ward, P. (2019). The Impact of Corporate Social Responsibilities on Financial Performance in China. Duke.

      [41] Yang, Y., & Stohl, C. (2020). The (in)congruence of measures of corporate social responsibility performance and stakeholder measures of corporate social responsibility reputation. Corporate Social - Responsibility and Environmental Management, 27(2), 969–981. https://doi.org/10.1002/csr.1859.

      [42] Yoo, D., & Lee, J. (2018). The Effects of Corporate Social Responsibility ( CSR ) Fit and CSR Consistency on Company Evaluation : The Role of CSR Support. Journal of Sustainability, 10(2956), 1–16. https://doi.org/10.3390/su10082956.

      [43] Zajkowski, R., & Domańska, A. (2019). The Directions of Interrelations Between the Company ’ s Performance and Corporate Social Responsibility ( CSR ) Activities. Folia Oeconomica, 4(343), 211–234. https://doi.org/10.18778/0208-6018.343.13.

  • Downloads

  • How to Cite

    Isaiah Ogungbade, O. (2020). Corporate Social Responsibility and Financial Performance of Deposit Money Banks: A new Evidence from Nigeria. International Journal of Accounting and Economics Studies, 9(1), 1-7. https://doi.org/10.14419/ijaes.v9i1.31249