Does Corporate Social Responsibility Predicate Good Financial Performance? Evidence from the Nigeria Banking Sector

Uche Lucy Onyekwelu, Michael Chidiebere Ekwe


This research examines the cointegration, magnitude and strength of the relationship between corporate social responsibility and key financial performance indicators in Nigeria with a focus on the Nigeria banking sector. The ex post facto research design was adopted because the study made use of secondary data obtained from annual reports and accounts of the two market leaders in the sector- First Bank Plc and Zenith Bank Plc. The study covered from the year 1988-2011 for the First Bank of Nigeria and from 2002–2011 for Zenith Bank Plc. The research made use of the ordinary least square (simple linear regression) for the analysis of collected data in order to evaluate the magnitude of association of the variables. Findings from the analysis show that the two banks invested less than ten percent (10%) of their annual profit in Corporate Social Responsibility (CSR) initiatives. The co-efficient of determination of the result obtained show that the explanatory variables account for changes or variations in the key financial performance indicators of the selected banks. Performance in their profit before taxes and the gross annual revenues were caused by changes in investment Corporate Social Responsibility (CSR) while no linear relationships could be established between the price for the shares and amount invested in CSR. The study therefore recommends that laws and regulations to obligate firms to invest a percentage of their annual profit to CSR be enacted by relevant government agencies.

Keywords: Corporate Social Responsibility, Corporate Accounting, Financial Reporting, Financial Performance.

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