Similarly Oba43 uses human resource management community CSR and charitable

Similarly oba43 uses human resource management

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companies in Nigeria. Similarly, Oba[43] uses human resource management, community CSR and charitable contributions as CSR proxies in his investigation of CSR performance of conglomerate firms in Nigeria. Recently, companies in Nigeria are encouraged to voluntarily provide narrative information about their CSR activities in their annual reports. The Companies and Allied Matters Act (CAMA, 1990) in Nigeria specifically mandates companies to disclose such information in the directors’ report which is a component of the audited annual financial statements. However, there are doubts as to the validity of the announced CSR investment[51]. As for financial performance, all the previous studies have either employed accounting or market definitions to study the relationship between CSR and firm performance[45]. Accounting–based and market–based measures have different theoretical implications[29]. Accounting-based measures are usually criticized because they capture only historical aspects of firm performance[38]. They are also subject to bias from managerial manipulation and differences in accounting policies and procedures[10]. Market-based measures usually overcome these problems because they are forward looking and focus on market performance. Furthermore, they are less susceptible to different accounting procedures and represent the investors’ evaluation of the ability of the firm to generate future economic earnings[38]. One of the market based measures of performance that has gained popularity in recent time is Tobin’s Q. A major advantage of using Tobin’s Q is that it avoids the challenge involved in estimating the rate of return[43]. Tobin’s Q is actually the ratio of a firm’s market value to the replacement cost of assets. In recent times, a number of scholars have studied the effect of CSR on the market value of firms, measured in terms of Tobin’s Q[4, 5, 9, and 43]. Almost all the studies reported a significant relationship between CSR measures and Tobin’s Q. A study of 60 manufacturing firms in Nigeria using Return on Total Assets (ROTA) as measure of performance showed a significant relationship between community development (CD) and performance., the result revealed a statistically significant relationship (at 5 percent level) between CD and ROTA[42]. The major limitation of the study however, is its use of accounting based rather market- based measure of performance. An earlier study by Oba[43] seems to have overcome the problem. The study examined the link between Community Corporate Social Responsibility (CCSR) and Tobin’s Q (a market based performance measure. The multiple regression result revealed an insignificant relationship between CCSR and Tobin’s Q. The major shortcoming of this study is its use of small sample of 6 conglomerate firms in Nigeria. As often emphasized, the sample size and number of observations have direct impact on the appropriateness and statistical power of multiple regressions[41]. Very large samples make the statistical significance test overly sensitive while small sample size reduces the statistical power of multiple regressions[26]. The present study overcomes this problem
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  • Spring '20
  • Amanullah
  • Test, Financial services, Corporate social responsibility, Corporate Social Responsibility and Firm Value

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