Effect of Community Development and Environmental Expenditure on Financial Performance of Listed Consumer Goods Firms in Nigeria

There has been diverse view regarding the nature of relationship between community development and environmental expenditure and financial performance of companies worldwide. This is due to different need of stakeholders and lack of clarity if company’s corporate social responsibility will affect their financial performance. This study investigates the effect of community development and environmental expenditure on financial performance of listed consumer goods firms in Nigeria over the period 2013 – 2023. The study adopts longitudinal panel research design and secondary data were collected from the company’s annual reports. The population of this study consists of 21 listed consumer goods firms with a sample size of seventeen (17) listed companies. The selection was made using purposive sampling technique. The independent variables are community development expenditure and environmental expenditure while dependent variable is financial performance proxied by Net Profit Margin. Firm Size used as a control variable. Also descriptive statistics, correlation and regression analyses were conducted with the aid of E-views 12. The result reveals that community development expenditure and environmental expenditure has significant and insignificant effect on net profit margin of listed consumer goods firms in Nigeria respectively. The study concludes that both community development expenditure and environmental expenditure have a positive impact on net profit margin of listed consumer goods firms in Nigeria. The study recommends that companies should improve on Corporate Social Responsibility activities and pay more attention to their environmental cost for sustenance of environment, thereby increasing their financial performance. Keywords: Community Development Expenditure, Environmental Expenditure, Net Profit Margin, Stakeholders Theory