Authors: Pat Obi; Inalegwu Ode-Ichakpa
Addresses: College of Business, Purdue University Northwest, Hammond, Indiana 46323, USA ' Faculty of Business and Law, Manchester Metropolitan University, Manchester, M15 6BH, UK
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.
Keywords: corporate social responsibility; CSR; financial performance; binary choice; logistic model; non-parametric tests; Nigeria.
International Journal of Business Governance and Ethics, 2020 Vol.14 No.1, pp.34 - 53
Received: 20 Apr 2018
Accepted: 28 Jan 2019
Published online: 27 Jan 2020 *