EFFECT OF CORPORATE SOCIAL RESPONSIBILITY ON FINANCIAL PERFORMANCE OF NIGERIAN BANKS: MODERATING EFFECT OF CORPORATE GOVERNANCE

Abstract Society's consciousness of the importance of corporate social responsibility has increased over the last decades. The study examined the moderating effect of corporate governance on the relationship between CSR and financial performance from 2012 to 2022. Corporate governance was proxied as board size, board independence, and board gender diversity. CSR was proxied using CSR disclosure index while financial performance was proxied using ROA and ROE. The null hypotheses were tested using robust random effect model for both models. The result shows that the effect of CSR on ROA is insignificant. Likewise, the effect is insignificant when financial performance is proxied with ROE. On the other hand, board size has a significant negative effect on ROA. The effect is insignificant in ROE. Findings also show that the effect of board independence on ROA is significant and positive. On the contrary, the effect of board independence on ROE is insignificant. The effect of board gender diversity on ROA and ROE is insignificant. The moderating effect of board size on the relationship between CSR and ROA is significant and positive. In contrast, the effect is significant and negative when financial performance is proxied as ROE. The moderating effect of board independence on the relationship between CSR and ROA is significant and negative. In contrast, the effect is significant and positive. The moderating effect of board gender diversity on the relationship between CSR and financial performance (ROA and ROE) is insignificant. The study recommends that Banks should aim to have a majority of independent directors on their boards. This ensures that board decisions are made with a greater degree of objectivity, reducing the potential for conflicts of interest and enhancing the board's ability to monitor management effectively.