DETERMINANTS OF CORPORATE SOCIAL RESPONSIBILITY DISCLOSURES IN NIGERIAN QUOTED COMPANIES.
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DETERMINANTS OF CORPORATE SOCIAL RESPONSIBILITY DISCLOSURES IN NIGERIAN QUOTED COMPANIES.
Chapter one
INTRODUCTION
1.1 Background for the Study
Corporate social responsibility disclosure by firms has progressively increased in size and complexity over the previous two decades (Smith, 2003). Over time, research has focused on understanding and explaining this aspect of business reporting that falls outside of traditional accounting disclosures.
Modern businesses must integrate societal and environmental considerations into their performance indicators to achieve their ultimate goals. business Social Responsibility (CSR) policies and reporting offer a strategic framework for attaining this comprehensive reassessment of business performance.
Although not a new concept, Corporate Social Responsibility (CSR) is an intriguing topic for academics and a contentious problem for company leaders and stakeholders.
The Commission of the European Communities provided the most widely used definition of Corporate Social Responsibility in 2001. According to the Commission, corporate social responsibility is the voluntary integration of social and environmental issues into a company’s commercial activities and interactions with stakeholders.
It addresses complicated concerns such as environmental protection, human resource management, workplace health and safety, relationships with local communities, and relationships with suppliers and customers.
The increasing need for firms to be socially responsible appears to have resulted in significant perceptual divergences, particularly in the context of the stakeholder-shareholder argument.
The “shareholder perspective” is based on the premise that managers’ sole role is to serve the interests of shareholders in the greatest way possible, employing organisational resources to grow the latter’s wealth through profit seeking.
In contrast, the “stakeholder perspective” implies that, in addition to shareholders, other groups or constituents (such as employees or the local community) are affected by a company’s activities and must be considered in management’ choices, maybe equally with shareholders.
By disclosing CSR information, a company meets the information demands of its stakeholders and offers a foundation for interaction between the firm and its stakeholders.
As a vital component of stakeholder management, CSR reporting impacts external perceptions of the firm, assists important stakeholders in determining if the organisation is a good corporate citizen, and ultimately justifies the firm’s continuing existence to its stakeholders. Gelb and Strawser (2001) claimed that increased reporting is a type of social responsibility.
Branco and Rodrigues (2006) observed that Corporate Social Responsibility is now viewed as a source of business advantage rather than an aim in itself.
CSR, in particular, may communicate to the market that the firm is socially and ecologically responsible, as well as generate goodwill for the firm, which can have a favourable impact on the firm’s finances.
Bowen (2000) highlighted that corporations engage in and report on CSR initiatives in order to raise their social visibility and strengthen stakeholder relations by creating promotional possibilities for the firm.
Furthermore, many CSR activities are conducted with the goal of presenting corporations in a positive light and giving reputational benefits that improve how the organisation is seen.
Though various studies have been conducted to analyse the causes of corporate social responsibility reporting in developed economies, the data for emerging economies such as Nigeria appears to be mostly anecdotal, and when experimentally examined, the research have been insufficient.
As a result, the purpose of this research is to empirically investigate the drivers of corporate social responsibility reporting using a sample of Nigerian publicly traded companies.
1.2 Statement of Problem
One method for assessing a company’s corporate social responsibility behaviour is to see if they engage in social responsibility disclosure. It is considered that when a firm engages in corporate social reporting, it gives a balanced account of its operations and affects, as well as a basis for stakeholders to evaluate its performance.
Since the impact has been disclosed, the reporting entity can be held accountable. However, environmental reporting has evolved in a voluntary manner, implying that firms can select what to reveal and may even choose not to.
In this regard, research attention (Sharfman & Fernandoi, 2008; Schneider, 2010; Roberts 1992) has mostly focused on why and what factors might lead a firm to engage in voluntary social responsibility disclosures. Studies (Hackston & Mime, 1996; Adams & Hart, 1998) emphasised the impact of firm size.
Connors and Gao (2009), Sharfman and Fernandoi (2008), and Schneider (2010) investigated the use of leverage. Dye and Sridha (1995) and Hackston and Mime (1996) examined the role of industry type.
Roberts (1992) investigated the significance of profitability. However, the research data in this regard has been equivocal, and the role of firm-specific characteristics has fluctuated, showing that the concerns are still very much unsettled in the literature, which defines the study’s contribution and relevance.
Furthermore, empirical information in this field from poor nations remains relatively inadequate, for a variety of reasons, the most important of which being the voluntary nature of CSR reporting.
Despite the vast empirical evidence from established economies, there is a knowledge gap about how business characteristics would influence voluntary reporting in developed and developing countries, as the magnitude, level of awareness, and implications of social cost vary significantly.
As a result, do we anticipate disparities in the impact of business variables on social responsibility disclosure across developing and established economies? The study’s findings make an essential contribution in this area.
1.3 Research Questions.
The research questions for this study are as follows:
1. How is corporate social responsibility disclosure strongly related to the firm size?
2. What major relationship exists between corporate social responsibility disclosure and profitability?
3. To what extent is corporate social responsibility significantly associated with business origin, and
4. How closely related is corporate social responsibility to firm industry type?
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