Does CSR Improve Firm Value?

The relationship between Corporate Social Responsibility (CSR) and firm value has garnered significant scholarly attention, yet empirical evidence remains inconclusive, particularly in emerging economies. This study addresses the critical question: Does CSR improve firm value? The primary objective is to empirically examine the effect of CSR engagement on firm value among publicly listed firms in Nigeria. Drawing from stakeholder and legitimacy theories, the study adopts a quantitative research design using panel data methodology. A sample of 127 firms listed on the Main Board of the Nigerian Exchange (NGX) from 2014 to 2023 was selected. CSR was measured using a disclosure index comprising economic, environmental, and social indicators, while firm value was proxied by Tobin’s Q. Data were analyzed using fixed and random effects regression models, with robust standard errors to control for heteroskedasticity and serial correlation. The findings reveal a statistically significant and positive relationship between CSR disclosure and firm value, suggesting that firms engaging in responsible social and environmental practices are rewarded by investors. However, the strength of this relationship varies across CSR dimensions, with social disclosure having the most substantial effect. The study is limited by potential endogeneity issues and reliance on secondary data, which may not fully capture qualitative CSR impacts. Practically, the findings underscore the strategic importance of CSR in enhancing investor confidence and long-term value creation. Socially, the study advocates for stronger regulatory frameworks to standardize corporate social responsibility (CSR) reporting. This study contributes original insights into the CSR–firm value nexus in an under-researched African context, offering guidance to scholars, policymakers, and corporate managers alike.