Impact of Environmental, Social and Governance Dimensions of Corporate Social Responsibility on Firm Performance: Evidence from Nigeria

The scarcity in literature of clear-cut methods and techniques used in determining the impact of corporate social responsibility (CSR) on a firm’s performance has led to mixed results. The most current empirical studies employed diverse CSR measures as well as performance measures. This study aims to examine the effect of CSR on the performance of oil and gas companies in Nigeria using the Thomson Reuter index as a measure of CSR and price-cost margin in addition to return on assets (ROA) and earnings per share (EPS) as measures of performance. Annual panel data from 55 oil companies for the period 2010–2019 operating in upstream, midstream, and oil-servicing activities were used. Findings revealed a negative non-significant relationship between CSR and price-cost margin (PCM) of the firms under study. These findings support the shareholder theory, which hypothesizes that the corporate social responsibility of the citizens is solely the responsibility of the government and that the responsibility of firms is profit-making. Mixed results of negative non-significant and positive significant relationships were recorded between CSR and ROA. This result also supports the stakeholder theory, which emphasis shareholders’ interest in all aspects of business operation. The corporate social performance (CSP) dimension correlates with the true nature of the Nigerian economy where firms make donations to communities and erect buildings for health and education purposes. A positive non-significant correlation was reported between CSR and earnings per share. There is room for improvement regarding performance and this can be achieved by increasing the CSR scores. Failure to do so may lead to a crisis which may inevitably affect performance.