Abstract
This study
examines the determinants of corporate social responsibility disclosures in
Nigerian quoted companies. The broad objective of the study is to examine the
determinants of corporate social responsibility of corporate entities.
Specifically, the study examines the relationship between company size,
profitability, industry type, firm’s origin and environmental responsibility
measured by extent of environmental reporting. The cross-sectional research
design is adopted for the study. The population consists of all quoted
companies in the Nigerian capital market. Data were obtained from annual report
and accounts of the sampled companies. Data collected were analyzed using the
descriptive statistics while hypotheses formulated were tested using the ordinary
least squares techniques. The findings indicated that a negative relationship
is observed between the extent of CSR and environmental items disclosed and
firm size. The effect of industry of operation shows a negative relationship.
The effect of company origin was found to be positively related to the extent
of CSR and environmental disclosures by companies. The study recommends among
others that there is the need for regulatory agencies to develop
a CSR and environmental responsibility framework that focuses considerably on
utilizing firm interest and providing corporate incentives and penalties for
environmental responsiveness and irresponsiveness respectively.
TABLE OF CONTENTS
Title Page i
Certification ii
Dedication iii
Acknowledgments iv
Abstract v
Table of Contents vi
Chapter One: Introduction
1.1 Background
to the Study 1
1.2 Statement
of Problem 4
1.3 Research
Questions 7
1.4 Objectives
of the Study 7
1.5 Statement
of Hypotheses 8
1.6 Significance
of the Study 9
1.7 Scope
of the Study 10
1.8 Limitations
of the Study 11
1.9 Definition of Terms 12
Chapter Two: Review of Related
Literature
2.1 Introduction 13
2.2 The concept of corporate social responsibility
13
2.3 Determinations of a corporate social and
environmental responsibility Disclosure 22
2.3.1 Company Size 22
2.3.2 Leverage 24
2.3.3 Profitability 26
2.3.4 Ownership
concentration 27
2.3.5 Effective tax
rates 30
2.3.6 Sensitive
Industry Membership 31
2.3.7 Auditor type 32
2.3.8 Country of origin
of the company 33
2.4 Review of related studies 34
2.5 Theories of corporate social responsibility 61
2.5.1 Legitimacy theory
61
2.5.2 Institutional
theory 63
2.5.3 Stakeholders
theory 65
Chapter Three: Research Methods and Design
3.1 Introduction
68
3.2 Research
design 68
3.3 Description
of the Population of the Study 69
3.4 Sample
Size 70
3.5 Sampling
Techniques 70
3.6 Sources
of Data Collection 70
3.7 Method of
Data Presentation 71
3.8 Method of
Data Analysis 72
Chapter Four: Data Presentation, Analysis and Hypothesis
Testing
4.1 Introduction
75
4.2 Presentation
of Data 75
4.3 Data
Analysis 76
4.4 Hypothesis
Testing 88
Chapter Five: Summary of Findings,
Conclusion and Recommendations
5.1 Introduction 93
5.2 Summary
of Findings 93
5.3 Conclusion
94
5.4 Recommendations
96
References 98
CHAPTER ONE
INTRODUCTION
1.1
Background to the Study
Corporate
Social responsibility disclosure by corporations has been increasing steadily
in both size and complexity over the last two decades (Smith, 2003). Research
attention over the years has attempted to understand and explain this area of
corporate
reporting which appears to lie outside the conventional domains of accounting
disclosures. The evolving challenge in contemporary business firms is the need
to
reconfigure their performance indices to incorporate Societal and environmental
concerns as part of the overall objective of business. Corporate Social
Responsibility (CSR) practices and reporting provides a strategic framework for
achieving this holistic reappraisal of
corporate performance. Although it is not a new concept, Corporate Social
Responsibility (CSR) remains an interesting area of discourse for academics and
an intensely debatable issue for business managers and their stakeholders.
The
most commonly used definition of Corporate Social Responsibility is that given
by the Commission of the European Communities in 2001. According to the
Commission, Corporate social responsibility is the integration of social and
environmental concerns by companies in their business operations and in their
interaction with their stakeholders on a voluntary basis. It is related to
complex issues such as environmental protection, human resources management,
health and safety at work relations with local communities, relations with
suppliers and consumers.
The
increasing demand for companies to be socially responsible seems to have
witnessed considerable perceptual divergences especially within the context of
the stakeholder-shareholder debate. The idea which underlies the “shareholder
perspective” is that the only responsibility
of managers is to serve the interests of shareholders in the best possible way,
using corporate resources to increase the wealth of the latter by seeking
profits. In contrast, the “stakeholder perspective” suggests that besides
shareholders, other groups or constituents are affected by a company’s
activities (such as employees or the local community), and have to be considered
in managers’ decisions possibly equally’ with shareholders.
By
reporting CSR information, a firm addresses the information needs of
stakeholders and provides a basis for dialogue between the firm and its
stakeholders. As a critical avenue of stakeholder management, CSR reporting
shapes external perceptions of the firm, helps relevant stakeholders assess
whether the firm is a good corporate citizen, and ultimately justifies the
firm’s continued existence to its stakeholders. Gelb and Strawser (2001) argued
that a greater level of reporting is itself a form of socially’ responsible
behaviour. Branco and Rodrigues (2006) noted that Corporate Social Responsibility
is now seen as a source of competitive advantage and not as an end in itself.
Specifically, CSR may signal to the market that the firm is social and
environmentally responsible and may create goodwill for the firm leading to
positive effects for firm financial performance. Bowen (2000) in this regards,
identified that corporations engage and report their CSR activities in order to
increase their social visibility and to improve stakeholder relations as it
creates promotional opportunities for the firm. Furthermore, many CSR activities
are made on the basis of presenting corporations in a positive light and
providing reputation effects that improves on how the organization is perceived.
Though
several studies have been done to investigate the determinants of corporate
social responsibility reporting in developed economies, the evidence for
developing economies like Nigerian seems to be largely anecdotal and where
empirically examined, the studies has not been adequate. Hence the focus of
this study to empirically examine the determinants of corporate social
responsibility reporting using a selection of quoted firms in Nigeria.
1.2
Statement of Problem
One approach to evaluating company’s corporate
social responsibility behavior is to examine if they engage in social
responsibility disclosure. It is believed that when a company engages in
corporate social reporting it presents a balanced reporting of its activities
and impacts and provides a basis for stakeholders to evaluate its performance.
The reporting entity can also be held accountable
for its impact since it is disclosed. However, environmental reporting has
developed rather voluntarily and this implies that companies can choose what to
disclose and may even decide not to. Research attention (Sharfman &
Fernandoi, 2008; Schneider, 2010; Roberts 1992) in this regard has been focused
largely on why and what factors could influence a company to engage in social
responsibility disclosures voluntarily. Studies (Hackston & Mime, 1996;
Adams & Hart, 1998) highlighted the importance of the company size. Connors
and Gao (2009), Sharfman and Fernandoi (2008) and Schneider (2010) examined the
role of leverage. Dye and Sridha (1995)
and Hackston and Mime (1996) have considered the role of industry type.
Roberts (1992) examined the role of profitability. However, the research
evidence in this regards has been inconclusive and the role of the firm
specific factors have been vacillating indicating that the issues are still
quite unresolved in the literature and this defines the contribution and
relevance of the study.
In addition, the empirical evidence in this area
from developing economies is still largely inadequate and a number of reasons
may account for this and of paramount amongst them being the voluntary stance
on CSR reporting. With the extensive empirical evidence from developed
economies, there is a knowledge gap about how corporate characteristics will
influence voluntary reporting for developed and developing economies as the
magnitude: level of awareness and implications of social cost differs
considerably. Consequently, do we expect differences in the influence of
corporate factors on social responsibility disclosure for both developing and
developed economies? The study findings are an important contribution in this
regards.
1.3 Research Questions
The following are the research questions for this
study;
1. How is corporate social responsibility
disclosure significantly related to company size,
2. What significant relation exist between
corporate social responsibility disclosure and profitability,
3. To what
extent is corporate social responsibility significantly related to firm origin,
and
4. How
significantly related is corporate social responsibility with firm industry
type?
1.4 Objective of the Study
The
main objective of this study is to examine the determinants of corporate social
responsibility disclosures in Nigerian listed companies. Other specific objectives
are to:
1. Examine the relationship between corporate
social responsibility disclosure and company size,
2. Ascertain if there is any significant
relationship between corporate social responsibility disclosure and
profitability,
3. Ascertain the significant relationship
between corporate social responsibility disclosure and firm origin, and
4. Examine the
relationship between corporate social responsibility disclosure and the firm
industry type.
1.5 Statement of Hypotheses
In
order to achieve the objective of this research work, the following hypotheses have
been formulated for empirical validation;
Hypothesis
One
HO: There is no significant relationship between
corporate social responsibility disclosure and company size.
HI:
There is a significant relationship
between corporate social responsibility disclosure and company size.
Hypothesis
Two
HO: There is no significant relationship between
corporate social responsibility disclosure and profitability.
HI:
There is a significant relationship between
corporate social responsibility disclosure and profitability.
Hypothesis
Three
HO: There is no significant
relationship between corporate social responsibility disclosure and firm
origin.
HI:
There is a significant relationship
between corporate social responsibility disclosure and firm origin.
Hypothesis
Four
HO: There is no significant relationship between
corporate social responsibility disclosure and the firm industry.
HI:
There is a significant relationship between
corporate social responsibility disclosure and the firm industry.
1.6 Significance of the Study
The
subject of corporate social responsibility is an important issue not used for
corporate entities alone, but also for society. The impact of corporate
activities on society demands that corporations must act responsibly in finding
ways to ensure that the social implications of their business concerns are
addressed especially when it constitutes a cost to society.
1. Industries:
In
Nigeria, multinational now try to placate the restive host communities by
embarking on series of ventures such as building classroom blocks, boreholes
and roads: offering some employment opportunities to the natives in the
community: and giving scholarships to selected students from the affected
communities. On the overall, Corporate Social Responsibility (CSR) activities
are gaining momentum in Nigeria as companies attempt to project a positive
image to the society.
2. Stakeholders:
The
study will also be useful to stakeholders who need to understand the concept
and issues involved in the CSR disclosure. In addition, the study will
significantly improve the existing studies from developing economies. The study
will also serve as a valuable research material for subsequent researches in
this direction.
3. Researcher:
It will serve as a reference point for
the future researchers’ interest.
1.7
Scope of the Study
The
study examines the evaluation of social responsibility of corporate bodies in
Nigeria. The study is restricted to firms listed on the Nigerian Stock Exchange
as it is more feasible to access information on their social responsibility
activities. The geographical region for this research is Edo State. The simple
random sampling technique was employed in selecting the 50 companies for 2010 –
2015 financial years.
1.8 Limitations
of the Study
In
writing this project, so many problems were encountered, which are listed
below:
·
Geographical Coverage: Factor that may
likely affect the work is the issue of investigating the concerned people in
carrying out the research work.
·
Problem of sourcing for material: The
research was faced with problems of getting current materials, textbooks,
journals and seminar papers related to subject matter.
·
Un-cooperative nature of the studied
firms: The researcher encountered problem of non-cooperation from some officials
of the selected regions to carry out the research. Some of the personnel
contacted for interview did not cooperate while some did reluctantly. The
difficulty in getting access to official and up-to-date records and documents
was also encountered.
1.9 Definition
of Terms
1. Social
Responsibility: This is the obligation of an
organization’s management towards the welfare and interests of the society in
which it operates.
2. Determinant:
A factor which decisively affects the nature of outcome of something.
3. Stakeholders:
A
person or group that has an investment, share or interest in something, as a
business or industry.
4. Organization:
A social unit of people that is structured and managed to meet a need or to
pursue collective goals.
5. Promotional
Opportunity: This refers to a special offer, such as
a sale or a product deal.
6. Financial
Performance: The level of performance of a business over a specified period
of time, expressed in terms of overall profits and losses during that time.
7. Leverage:
The use of various financial instruments or borrowed capital, such as
margin, to increase the potential return of an investment.
Click “DOWNLOAD NOW” below to get the complete Projects
FOR QUICK HELP CHAT WITH US NOW!
+(234) 0814 780 1594
Login To Comment