Corporate Social Responsibility and Profitability: Evidence from Listed Oil and Gas Companies in Nigeria

Abstract

Background: Corporate social responsibility costs influence profitability in Nigeria’s oil and gas sector, where environmental, social, and financial pressures create a complex balance between stakeholder expectations and firm performance.

Aims: This study examined corporate social responsibility (CSR) and profitability of listed oil and gas companies in Nigeria. Key profitability indicators such as net profit margin (NPM), return on equity (ROE), and earnings per share (EPS) was employed, while social responsibility costs served as CSR proxy. Study Design: Ex-post facto design was utilized as the study employs secondary data that cannot be tampered with.

Methodology: The study’s population consists of eight (8) oil and gas firms listed on the Nigerian Exchange Group, while purposive sampling technique was adopted to select a sample size of seven (7) oil and gas companies. The study gathered secondary data from seven listed oil and gas companies in Nigeria between 2014 and 2023. The data was gathered from the firms’ yearly financial statements. The study employed descriptive statistics and regression analysis.

Results: The findings revealed that social responsibility cost has insignificant effect on NPM and ROE (β = -0.325002, -0.011794, p = 0.6988, 0.9565 > 0.05), while social responsibility cost was found to positively and significantly affects EPS of listed oil and gas companies in Nigeria (β = 8.012202, p = 0.0445 < 0.05).

Conclusion: The study concludes that although CSR may not directly improve profit margins or returns on equity, it is however important for long-term profitability and financial performance. As a result, the management and board of directors of oil and gas companies should create a balance between making money and being socially responsible, as this would improve the firms’ profit margin and return on equity on the long run.