Does Capital Structure Drive Corporate Social Responsibility Initiatives? Evidence from Listed Manufacturing Firms in Nigeria

The need to ascertain whether capital structure drives corporate social responsibility initiatives has become pertinent for modern day business sustenance. Thus, the study examined the effect of capital structure on the philanthropic responsibility costs of listed manufacturing firms in Nigeria. The specific objective was to assess the effect of debt to asset ratio, debt to equity ratio and interest coverage ratio on the philanthropic responsibility costs of listed manufacturing firms in Nigeria. The study adopts an ex-post facto research design. The study's population consists of all the twenty-one listed manufacturing firms under the consumer goods sector of the Nigerian Exchange Group. The fifteen (15) firms that made up the sample size for the study were determined using purposive sampling technique. Secondary data used in the study were sourced from the annual reports and financial statements of the sampled firms, spanning twelve-year period from 2012 to 2023. The study employed descriptive analysis, which involved calculating mean, range values, standard deviation, and Jarque-Bera probability values. To test the formulated hypotheses, the research used the Ordinary least square regression with the support of EVIEWS 11 software. The findings revealed that: Debt to Asset Ratio (DAR), Debt to Equity Ratio (DER) and Interest Coverage Ratio (ICR) all have a positive but insignificant effect on philanthropic responsibility costs of listed manufacturing firms in Nigeria. In conclusion, the results of the study highlighted the interconnectedness of corporate capital structure and social responsibility, suggesting that the way a firm finances its operations can have a meaningful impact on its commitment to societal well-being and responsibility.