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Financial indicators of corporate social responsibility in Nigeria: a binary choice analysis

Author

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  • Pat Obi
  • Inalegwu Ode-Ichakpa

Abstract

Using multivariate binary choice models, this study investigates the effect of financial indicators on the practice of corporate social responsibility (CSR) in Nigeria. The indicators include return on equity, asset size, and revenue growth. Results of both linear probability and logistic models show that return on equity and asset size increase the likelihood of CSR practice. Sales growth has a negative effect. Compared to other metrics, firms with a large asset investment exhibit the highest likelihood of investing in CSR. Non-parametric tests confirm the positive linkage between CSR and asset size. These findings suggest that large firms, irrespective of their financial conditions, are more likely than other firms to invest in social initiatives. An implication for civil society might be to employ moral suasion to encourage financially strong firms, irrespective of size, to embrace CSR as an important means to boost their public image and long run performance.

Suggested Citation

  • Pat Obi & Inalegwu Ode-Ichakpa, 2020. "Financial indicators of corporate social responsibility in Nigeria: a binary choice analysis," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 14(1), pages 34-53.
    • Handle: RePEc:ids:ijbget:v:14:y:2020:i:1:p:34-53
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    Cited by:

    1. Helen LaVan & Lori S. Cook & Ivana Zilic, 2021. "An analysis of the ethical frameworks and financial outcomes of corporate social responsibility and business press reporting of US pharmaceutical companies," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 15(3), pages 326-355.
    2. Magdalena Kludacz-Alessandri & Małgorzata Cygańska, 2021. "Corporate Social Responsibility and Financial Performance among Energy Sector Companies," Energies, MDPI, vol. 14(19), pages 1-16, September.

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