IDEAS home Printed from https://ideas.repec.org/a/hur/ijaraf/v5y2015i3p116-132.html
   My bibliography  Save this article

Corporate Social Responsibility: Driving Dynamics on Firm’s Profitability in Ghana

Author

Listed:
  • E.O. Marfo
  • L. Chen
  • H. Xuhua
  • H.A. Antwi
  • E. Yiranbon

Abstract

This study analyzes the relationship between corporate social responsibility (CSR) and company’s profitability (CP) in Ghana with the utilization of mixed data, obtained from sixteen (16) firms' audited annual report and financial statements between "2005-2014", filed with the Ghana stock Exchange (GSE) and Register General of companies. We use lagged data from the Ghana Investment Promotion Centre (GIPC) to establish the relationship between CP and CSR. In addition 850 questionnaires were administered to the public for CSR level of awareness data. The data collected are being analyzed by the use of Ordinary Least Square (OLS) for the study. Results from the analysis demonstrated that the selected companies have contributed below ten percent of their yearly profit to support social responsibility programmes. The co-efficient of determination of the findings demonstrates the extracts that the logical variable account for changes or varieties in chosen companies’ profits after tax (PAT) are brought about by changes in corporate social responsibility (CSR) in Ghana. It is then prescribes that regulations and laws to commit companies’ to be apparent, satisfactory consideration ought to be given to social accounting regarding social cost and to agree to the establishment of corporate social responsibility.

Suggested Citation

  • E.O. Marfo & L. Chen & H. Xuhua & H.A. Antwi & E. Yiranbon, 2015. "Corporate Social Responsibility: Driving Dynamics on Firm’s Profitability in Ghana," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 5(3), pages 116-132, July.
    • Handle: RePEc:hur:ijaraf:v:5:y:2015:i:3:p:116-132
    as

    Download full text from publisher

    File URL: http://hrmars.com/hrmars_papers/Article_14_Corporate_Social_Responsibility.pdf
    Download Restriction: no
    File URL: http://hrmars.com/hrmars_papers/Article_14_Corporate_Social_Responsibility.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Xueming Luo & Heli Wang & Sascha Raithel & Qinqin Zheng, 2015. "Corporate social performance, analyst stock recommendations, and firm future returns," Strategic Management Journal, Wiley Blackwell, vol. 36(1), pages 123-136, January.
    2. Rupert J. Baumgartner, 2014. "Managing Corporate Sustainability and CSR: A Conceptual Framework Combining Values, Strategies and Instruments Contributing to Sustainable Development," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 21(5), pages 258-271, September.
    3. Mensah, Justice T. & Pomaa-Berko, Maame & Adom, Philip Kofi, 2012. "Does Automation Improve Stock Market Efficiency? Evidence from Ghana," MPRA Paper 43642, University Library of Munich, Germany.
    4. Shan Xu & Duchi Liu & Jianbai Huang, 2015. "Corporate social responsibility, the cost of equity capital and ownership structure: An analysis of Chinese listed firms," Australian Journal of Management, Australian School of Business, vol. 40(2), pages 245-276, May.
    5. Cuppen, Eefje & Breukers, Sylvia & Hisschemöller, Matthijs & Bergsma, Emmy, 2010. "Q methodology to select participants for a stakeholder dialogue on energy options from biomass in the Netherlands," Ecological Economics, Elsevier, vol. 69(3), pages 579-591, January.
    6. Teoh, Siew Hong & Welch, Ivo & Wazzan, C Paul, 1999. "The Effect of Socially Activist Investment Policies on the Financial Markets: Evidence from the South African Boycott," The Journal of Business, University of Chicago Press, vol. 72(1), pages 35-89, January.
    7. Abagail McWilliams & Donald Siegel, 2000. "Corporate social responsibility and financial performance: correlation or misspecification?," Strategic Management Journal, Wiley Blackwell, vol. 21(5), pages 603-609, May.
    8. David Detomasi, 2008. "The Political Roots of Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 82(4), pages 807-819, November.
    9. Andrea Pérez & Ignacio Rodríguez del Bosque, 2013. "Measuring CSR Image: Three Studies to Develop and to Validate a Reliable Measurement Tool," Journal of Business Ethics, Springer, vol. 118(2), pages 265-286, December.
    10. Inoue, Yuhei & Lee, Seoki, 2011. "Effects of different dimensions of corporate social responsibility on corporate financial performance in tourism-related industries," Tourism Management, Elsevier, vol. 32(4), pages 790-804.
    11. Aseem Prakash & Matthew Potoski, 2012. "Voluntary environmental programs: A comparative perspective," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 31(1), pages 123-138, December.
    12. Xuan Bai & Jeanine Chang, 2015. "Corporate social responsibility and firm performance: The mediating role of marketing competence and the moderating role of market environment," Asia Pacific Journal of Management, Springer, vol. 32(2), pages 505-530, June.
    13. Judith F. Posnikoff, 1997. "Disinvestment From South Africa: They Did Well By Doing Good," Contemporary Economic Policy, Western Economic Association International, vol. 15(1), pages 76-86, January.
    14. M. López & Arminda Garcia & Lazaro Rodriguez, 2007. "Sustainable Development and Corporate Performance: A Study Based on the Dow Jones Sustainability Index," Journal of Business Ethics, Springer, vol. 75(3), pages 285-300, October.
    15. Peter Wright & Stephen P. Ferris, 1997. "Agency Conflict And Corporate Strategy: The Effect Of Divestment On Corporate Value," Strategic Management Journal, Wiley Blackwell, vol. 18(1), pages 77-83, January.
    16. Felipe Arias Fogliano de Souza Cunha & Carlos Samanez, 2013. "Performance Analysis of Sustainable Investments in the Brazilian Stock Market: A Study About the Corporate Sustainability Index (ISE)," Journal of Business Ethics, Springer, vol. 117(1), pages 19-36, September.
    17. Bhattacharya, Tania Ray & Managi, Shunsuke, 2012. "Contributions of the private sector to global biodiversity protection: case study of the fortune 500 companies," MPRA Paper 39949, University Library of Munich, Germany.
    18. Edmund Byrne, 2014. "In Lieu of a Sovereignty Shield, Multinational Corporations Should Be Responsible for the Harm They Cause," Journal of Business Ethics, Springer, vol. 124(4), pages 609-621, November.
    19. Singhapakdi, Anusorn & Lee, Dong-Jin & Sirgy, M. Joseph & Senasu, Kalayanee, 2015. "The impact of incongruity between an organization's CSR orientation and its employees' CSR orientation on employees' quality of work life," Journal of Business Research, Elsevier, vol. 68(1), pages 60-66.
    20. Maretno Harjoto & Hoje Jo, 2015. "Legal vs. Normative CSR: Differential Impact on Analyst Dispersion, Stock Return Volatility, Cost of Capital, and Firm Value," Journal of Business Ethics, Springer, vol. 128(1), pages 1-20, April.
    21. Ethel Yiranbon & Zhou Lulin & Henry Asante Antwi & Emmanuel Opoku Marfo & Kwame Oduro Amoako & Daniel Kwame Offin, 2014. "Exploring the Expectation and Perception of Socio-Economic Needs of the Elderly in Ghana: An Empirical Analysis," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(7), pages 80-94, July.
    22. Susanne Arvidsson, 2014. "Corporate social responsibility and stock market actors: a comprehensive study," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 10(2), pages 210-225, May.
    23. Harrison, Jeffrey S. & Wicks, Andrew C., 2013. "Stakeholder Theory, Value, and Firm Performance," Business Ethics Quarterly, Cambridge University Press, vol. 23(1), pages 97-124, January.
    24. Marks, Michael B., 2012. "Time banking service exchange systems: A review of the research and policy and practice implications in support of youth in transition," Children and Youth Services Review, Elsevier, vol. 34(7), pages 1230-1236.
    25. Vicente Lima Crisóstomo & Fátima de Souza Freire & Felipe Cortes de Vasconcellos, 2011. "Corporate social responsibility, firm value and financial performance in Brazil," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 7(2), pages 295-309, June.
    26. Ethel Yiranbon & Zhou Lulin & Henry Asante Antwi & Emmanuel Opoku Marfo & Kwame Oduro Amoako & Daniel Kwame Offin, 2014. "Evaluating the Consequences of Ageing Population on Healthcare Cost to Ghana using Inflation-Adjusted Expenditure and Demographic Factors," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(2), pages 282-290, April.
    27. Jean-Michel Sahuta & Sandrine Boulerne & Medhi Mili & Frédéric Teulon, 2014. "What Relation Exists Between Corporate Social Responsibility (Csr) And Longevity Of Firms?," Working Papers 2014-248, Department of Research, Ipag Business School.
    28. Ming Jia & Zhe Zhang, 2014. "Donating Money to Get Money: The Role of Corporate Philanthropy in Stakeholder Reactions to IPOs," Journal of Management Studies, Wiley Blackwell, vol. 51(7), pages 1118-1152, November.
    29. Amy J. Hillman & Gerald D. Keim, 2001. "Shareholder value, stakeholder management, and social issues: what's the bottom line?," Strategic Management Journal, Wiley Blackwell, vol. 22(2), pages 125-139, February.
    30. Lin, Chin-Huang & Yang, Ho-Li & Liou, Dian-Yan, 2009. "The impact of corporate social responsibility on financial performance: Evidence from business in Taiwan," Technology in Society, Elsevier, vol. 31(1), pages 56-63.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Banu Dincer, 2016. "The Role of Sustainability Disclosures for the Capital Market Participants: Evidence from Turkey," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 6(4), pages 134-141, October.
    2. Enrica Sepe & Margherita Smarra & Marco Sorrentino, 2015. "Does Ethic Rating Decrease Firms’ Cost of Capital? Empirical Insights from the Italian Setting," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 5(4), pages 54-68, October.
    3. Musah Mohammed Saeed & Mahalakshmi Mudliar & Manisha Kumari, 2023. "Corporate social responsibility and financial performance nexus: Empirical evidence from Ghana," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 2799-2815, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Woon Leong Lin & Chin Lee & Siong Hook Law, 2021. "Asymmetric effects of corporate sustainability strategy on value creation among global automotive firms: A dynamic panel quantile regression approach," Business Strategy and the Environment, Wiley Blackwell, vol. 30(2), pages 931-954, February.
    2. She‐Chih Chiu & Hsuan‐Chu Lin & Chuan‐San Wang, 2017. "The Impact of Investments in Pollution Reduction on Shareholder Wealth: Evidence from Taiwanese Manufacturing Companies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 24(6), pages 676-691, November.
    3. Saeidi, Sayedeh Parastoo & Sofian, Saudah & Saeidi, Parvaneh & Saeidi, Sayyedeh Parisa & Saaeidi, Seyyed Alireza, 2015. "How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction," Journal of Business Research, Elsevier, vol. 68(2), pages 341-350.
    4. Mauro Sciarelli & Mario Tani & Giovanni Landi & Ornella Papaluca, 2019. "The Impact of Social Responsibility Disclosure on Corporate Financial Health: Evidences from Some Italian Public Companies," International Business Research, Canadian Center of Science and Education, vol. 12(3), pages 109-122, March.
    5. Sandra Escamilla-Solano & Antonio Fernández-Portillo & Jessica Paule-Vianez & Paola Plaza-Casado, 2019. "Effect of the Disclosure of Corporate Social Responsibility on Business Profitability. A Dimensional Analysis in the Spanish Stock Market," Sustainability, MDPI, vol. 11(23), pages 1-17, November.
    6. Abdelmajid EL WAATMANI, 2018. "Industrial clusters and promotion of CSR: the case of developing countries," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 9(2), pages 69-80, December.
    7. Lin, Woon Leong & Law, Siong Hook & Ho, Jo Ann & Sambasivan, Murali, 2019. "The causality direction of the corporate social responsibility – Corporate financial performance Nexus: Application of Panel Vector Autoregression approach," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 401-418.
    8. Salma Zaiane & Dorra Ellouze, 2023. "Corporate social responsibility and firm financial performance: the moderating effects of size and industry sensitivity," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 27(4), pages 1147-1187, December.
    9. Christopher Groening & Vamsi K. Kanuri, 2018. "Investor Reactions to Concurrent Positive and Negative Stakeholder News," Journal of Business Ethics, Springer, vol. 149(4), pages 833-856, June.
    10. Kim, Sooin & Yoo, Jungmin, 2022. "Corporate Opacity, Corporate Social Responsibility, and Financial Performance," Finance Research Letters, Elsevier, vol. 49(C).
    11. Ben Lahouel, Béchir & Ben Zaied, Younes & Managi, Shunsuke & Taleb, Lotfi, 2022. "Re-thinking about U: The relevance of regime-switching model in the relationship between environmental corporate social responsibility and financial performance," Journal of Business Research, Elsevier, vol. 140(C), pages 498-519.
    12. Abdelmajid EL WAATMANI, 2018. "Industrial clusters and promotion of CSR: the case of developing countries," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 9(2), pages 69-80, December.
    13. Sana Noor & Abubakr Saeed & Muhammad Saad Baloch & Muhammad Awais, 2020. "CSR permanency, family ownership, and firm value: Evidence from emerging economies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(5), pages 2135-2149, September.
    14. Chi, Wuchun & Wu, Shing-Jen & Zheng, Zhen, 2020. "Determinants and consequences of voluntary corporate social responsibility disclosure: Evidence from private firms," The British Accounting Review, Elsevier, vol. 52(6).
    15. Cristian Carini & Nicola Comincioli & Laura Poddi & Sergio Vergalli, 2017. "Measure the Performance with the Market Value Added: Evidence from CSR Companies," Sustainability, MDPI, vol. 9(12), pages 1-19, November.
    16. Kong, Dongmin, 2012. "Does corporate social responsibility matter in the food industry? Evidence from a nature experiment in China," Food Policy, Elsevier, vol. 37(3), pages 323-334.
    17. Leon Zolotoy & Don O’Sullivan & Jill Klein, 2019. "Character Cues and Contracting Costs: The Relationship Between Philanthropy and the Cost of Capital," Journal of Business Ethics, Springer, vol. 154(2), pages 497-515, January.
    18. Sadok El Ghoul & Omrane Guedhami & Yongtae Kim, 2017. "Country-level institutions, firm value, and the role of corporate social responsibility initiatives," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(3), pages 360-385, April.
    19. Laura Poddi & Sergio Vergalli, 2008. "Does Corporate Social Responsibility Affect Firms' Performance?," Working Papers 0809, University of Brescia, Department of Economics.
    20. Yuanyuan Hu & Shouming Chen & Yuexin Shao & Su Gao, 2018. "CSR and Firm Value: Evidence from China," Sustainability, MDPI, vol. 10(12), pages 1-18, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hur:ijaraf:v:5:y:2015:i:3:p:116-132. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hassan Danial Aslam (email available below). General contact details of provider: http://hrmars.com/index.php/pages/detail/Accounting-Finance-Journal .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.