Beyond Compliance: The Role of CSR in Financial Performance in Nigeria

This study investigates the effect of corporate social responsibility (CSR) on firm financial performance (FFP) among 152 publicly listed firms on the Nigerian Stock Exchange over the period 2015–2024. Despite theoretical expectations that CSR enhances profitability through improved stakeholder relationships, reputation, and operational efficiencies, empirical evidence in emerging markets remains mixed. Using panel data analysis, the study employs pooled ordinary least squares (OLS), fixed effects (FE), and random effects (RE) estimators to assess the relationship between CSR and FFP while controlling for firm size (FS), leverage (FL), age (FA), growth (FG), and board independence (BI). Model selection was guided by the Hausman test, which confirmed FE as the most appropriate specification. Descriptive statistics reveal substantial heterogeneity in CSR engagement, firm size, and performance, while correlation analysis indicates minimal multicollinearity among variables. Regression results show that CSR significantly and positively influences FFP (FE β = 0.198, p < 0.01), indicating that firms increasing CSR activities over time experience improved financial outcomes. Firm size and growth also exert positive and significant effects, while leverage, age, and board independence exhibit limited within-firm significance. Robustness checks, including clustered standard errors, variance inflation factor (VIF) analysis, and autocorrelation tests, confirm the reliability of findings. The study contributes to the literature by providing context-specific evidence from Nigeria on the financial benefits of CSR, highlighting the importance of firm growth and size, and clarifying the nuanced roles of leverage, age, and governance in mediating CSR effects. Practically, the findings encourage firms to strategically invest in CSR to enhance profitability, while policymakers may consider promoting CSR disclosure and best practices to strengthen corporate sustainability.