Corporate Social Responsibility and Shareholders’ Wealth of Industrial Goods Producing Companies Listed on the Exchange Group PLC of Nigeria
Authors: Inyang William Smart , Joel Efiong Eme , Obeten Okoi Innocent , Orok Akaniyene Billy , Ubi Ije Ubana , Mbu-Ogar Geraldine Banku 
Published: June 2023

Purpose: The purpose of this study is to determine how the practices of corporate social responsibility (CSR) influence the wealth of shareholders of industrial goods producing companies listed on the Exchange Group Plc of Nigeria and other developing countries.
 
Theoretical Framework: The role played by CSR practices in enhancing shareholders’ wealth has attracted the interests of companies’ executives and policy makers all over the world. The theoretical foundations of this research work are provided by the Shareholder Value Theory, the stakeholder theory, the Business Ethics theory and the Agency theory. However, this work is anchored on the shareholder value theory propounded by Milton Friedman in 1970 and this is used to evaluate the influence of corporate social responsibility on shareholders’ wealth.
 
Design/methodology/approach: The study uses the ex-post facto research design and judgemental sampling technique to select a sample of 10 industrial goods producing firms listed on the Nigerian Exchange Group Plc as at 31st December, 2021. Social responsibility relationships with the society, employees, suppliers, customers, tax authorities and lenders provide the basis for sample selection. Information from the financial statements of the sampled companies was used to compute weighted average cost of capital (WACC), rate of stock turnover, actual corporate tax rate, invested capital, leverage, return on equity (ROE), value of debts and value of equity. This approach facilitates the computation of economic value added (EVA) which is used as proxy for shareholders’ wealth. Firm-year observations of 1,840, ordinary least squares panel data regression, fixed and random effects models, stationarity test, cross-section dependence test and the Hausman test are used for data diagnosis and analysis.
 
Findings: The research has disclosed that CSR to society positively and significantly influences shareholders’ wealth while CSR to suppliers and lenders have non-significant positive effect on shareholders’ wealth. Contrastingly, it is further revealed that CSR to employees and tax authorities have significant negative effects on shareholders’ wealth while CSR to customers negatively and non-significantly influences shareholders’ wealth.
 
Research, Practical & Social implications: The implication for managers is that CSR relationship with society is value enhancing in Nigeria’s industrial goods sector while CSR relationships with employees and tax authorities are value destroying. Value enhancing results of the dealings with suppliers and lenders and the value destroying result of the dealings with customers lack sufficient evidence. This research has helped in filling the gap in the existing literature and in serving as the basis for the economic and social development of Nigeria and other developing and developed countries of the world.
 
Originality/value: This is the first time in the industrial goods sector that we are associating four new corporate social responsibility variables namely, CSR to suppliers, CSR to customers, CSR to tax authorities and CSR to lenders with shareholders’ wealth. This study encourages the revival of CSR to employees and CSR to tax authorities which are currently value destroying in the industrial goods sector of Nigeria.