Corporate Social Responsibility and the Financial Performance of Oil and Gas Entrepreneurial Marketing Firms: An Appraisal of Firms in an Emerging Economy

Corporate Social Responsibility and the Financial Performance of Oil and Gas Entrepreneurial Marketing Firms: An Appraisal of Firms in an Emerging Economy

Emmanuel Uniamikogbo, Ikedinachi Ayodele Power Wogu, Osarenren Osasere Aigienohuwa, Sanjay Misra, Manju Kaushik
DOI: 10.4018/978-1-6684-5871-6.ch004
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Using an ex-post-facto research design, this study examined how listed Nigerian oil and gas entrepreneurial marketing companies' financial performance is impacted by their commitment to CSR. A sample of 11 listed oil and gas entrepreneurial marketing companies in the Nigerian Exchange Group (NGX) for 2010–2019 was used. The sample companies' annual reports were used as data collection sources. The panel regression and Arrelano and Bond GMM estimation results were used for the study outcomes. The findings indicate that CSR significantly and positively affected the ROA, ROE, and share price of oil and gas entrepreneurial marketing firms in Nigeria. The study recommends that companies increase their CSR activity since it helps boost their financial performance. The state should develop a strong policy and develop an effective and enforceable modern CSR framework with effective state control in Nigeria.
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1. Introduction

Financial and non-financial information that is pertinent, accurately portrayed, and helpful for vision-making is essential to aid all stakeholders in providing corporate reports (Umoren, Ogbari, & Atolagbe, 2016). Companies worldwide are currently concentrating on combining their financial and non-financial information as effectively as possible, especially when firms experience new environmental and societal changes. Therefore, every organization must disclose in its annual reports the many actions that impacted its stakeholders. The lack of this practice is turning into a major problem amongst these companies on a global scale.

Corporate social responsibility (CSR) is described by Umoren et al. (2016) as the internal monitoring and management as well as outward communication that enables organizations of all sizes to satisfy users' expanding information needs (internal and external). CSR communicates information about a company's economic, environmental, and social operations; the connected effects those operations have on the company and others as a result of its daily operations. Stakeholders (investors, the government, citizens, workers, clients, suppliers, trade associations, environmental organizations, etc.) count on businesses to generate reports that show their financial value, foster innovation, and advance learning. Long-term corporate success relies on strong social and environmental performance and a sound financial situation. One of the most important steps in creating a sustainable global economy is corporate social responsibility. CSR increases corporate responsibility, fosters confidence, promotes openness, spurs better creativity, boosts internal management and decision-making processes, lowers compliance costs, and provides a competitive edge (Umoren, et al., 2016).

Eccles and Krzuz (2010) contend that because even the most knowledgeable users need help understanding typical company reports, they are becoming less relevant and valuable for analysts and investors. Today's financial information users require data that will enable them to assess an entity's financial, social, and environmental responsibility. Businesses are expected to perform more than provide financial statements that comply with accounting rules. While companies are expected to conduct their operations in a way that minimizes their negative environmental effects, they should also make positive contributions to the communities in which they operate by considering the various requirements of their stakeholders.

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