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Volume 11 Issue 4, October-December 2023 

ISSN: 2836-9416 

Impact Factor: 5.57 

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IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON STOCK 
PRICES: A STUDY OF NIGERIAN MANUFACTURING FIRMS 

 
 

Dr. Amina Zubairi 
Director, Zonal Offices Coordination Department, Securities and Exchange Commission-Abuja. 

 
Abstract: The past three decades have witnessed a substantial surge in Corporate Social 
Responsibility (CSR) investments, driven by growing awareness of the adverse impacts of corporate 
operations on communities, the environment, and society at large. This has prompted heightened 
scrutiny from human rights organizations, socially conscious investors, and consumers, especially 
in the context of multinational companies (MNCs). The United Nations has also demonstrated its 
commitment to addressing these concerns, exemplified by the appointment of a United Nations 
Special Representative for business and Human Rights in 2005. However, the response from national 
governments has varied, with some hesitating to articulate clear definitions of CSR. This paper 
explores the evolving landscape of CSR, shedding light on the motivations, challenges, and 
implications for businesses, governments, and society. 
Keywords: Corporate Social Responsibility (CSR), Multinational Companies (MNCs), United 
Nations, Human Rights, Environmental Impact 
  
1.0 Introduction  
  
Over the last three decades, there has been a significant growth in the investment in Corporate Social 
Responsibility (CSR) both at national and international levels. This is because of the negative effect of 
corporate operations on the health, culture, economic and social life of the communities within which 
they operate. As a result, there have been a serious public responses, particularly from the human rights 
agencies, social investors and customers demanding organizations especially multinational companies 
(MNCs) to control and prevent the negative effects of their activities on the environment (Banerjee, 
2008). Most recently, the concern of the United Nation (UN) through the appointment in 2005 of a 
United Nation’s Special Representative for business and Human Rights, have outstripped the 
willingness of some national government to confront and more clearly articulate their own 
understanding of what CSR entails (Nolan, 2007).  
CSR is a concept with similar processes with corporate responsibility, Corporate Sustainable 
Development, Corporate Citizenship, and Corporate Sustainability. Anderson (1989) sees CSR as 
operating a business on reliable, sustainable, and desirable basis that respect ethical values, people, 
communities, and the environment. While Jones and George (2003) see the term as a manager’s duty 
or obligation to make decisions that nurture, protect, enhance, and promote the welfare and well-being 
of stakeholders and society as a whole. In the words of European Union (EU, 2001), CSR is where a 
corporation integrates social and environmental concerns in their business operations and in their 
interaction with their stakeholders on voluntary basis, as they are aware that, responsible behavior 

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ISSN: 2836-9416 

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leads to sustainable business success. In summary, CSR entails some level of responsibility that is not 
liability for social and environmental issues. McWilliams and Siegel (2001) add that, CSR is more than 
just following the law.  
While business organizations around the world are increasingly integrating CSR into all aspect of their 
business, critics questioned the legitimacy and value of CSR (Tsoutsoura, 2004). Some of them argue 
that corporations are inefficient and inappropriate agents of social change and therefore, firms have 
the sole social responsibility of maximizing the value of shareholders (Friedman, 1970; and Gelb and 
Stawser, 2001). In another view, CSR covers many issues that are traditionally addressed by 
government, thus, firm’s resources are poorly suited for addressing social and environmental problems 
(Tsoutsoura, 2004).   
However, in response to these, Freeman (1984) argues that, corporate entities have responsibilities to 
constituent groups that affect and are affected by the activities of the corporations. In addition, Preston, 
(1978); Waddock and Graves (1997); and McWilliams and Siegel (2001) established a significant 
positive relationship between CSR and financial performance. That is, firms that are involved in CSR 
preformed as well as or better than their counterparts that do not engage in CSR (Pava and Krausz, 
1996). Similarly, the proponents of CSR assert with respect to the view that social and environmental 
issues are the responsibility of government; that, in view of shifting economic power, corporations 
should have an increasing role and responsibility for addressing social and environmental problems 
(Tsoutsoura, 2004). In essence, the benefits of engaging in CSR by companies includes reputation 
enhancement, recruiting and retaining high quality workers, charging a premium price and 
competitive advantage (Baron, 2001; Bagnoli and Watts, 2003).  
However, one of the leading arguments for CSR recently is the internationalization of business 
operations, that is, the increasing dominance of Multinational Corporations (MNCs) in the developing 
countries. A pioneer in promoting CSR in a development context was United Kingdom’s Department 
for International Development (DFID) by the establishment of socially responsible business unit in 
1997 (Jenkins, 2005). Other efforts in support of CSR in this respect includes: the establishment of 
codes of conduct for transnational companies by UN, the changing view of the development agencies 
on the objective of development, the creation of United Nation Development Programme (UNDP); and, 
the decline in confidence in the role of the government as an agent for development. These together 
resulted in the creation of UN Millennium Development Goals (MDGs) with the goals of eradicating 
poverty and hunger, achieving universal primary education, reducing mortality and improving health 
and environmental sustainability (Jenkins, 2005). Therefore, in view of these and the increasing flows 
of capital to developing countries by MNCs, the development agencies see CSR as a tool for achieving 
the developmental goals. Parahalad cited in Jenkins (2005) states that MNCs could radically improve 
the lives of people and bring a more stable and sustainable world.   
Although, CSR practice comprises of all firms, social and environmental challenges are to a large extent 
associated with manufacturing firms because of the significant impact of their activities on the modern 
globalized economic environment.   
However, in the wake of growing CSR concerns by corporate entities both national and multinationals, 
Nigeria and its environs is experiencing increasing social, economic, and environmental difficulties. 
This is despite of the several manufacturing companies in almost all parts of the country, claiming 

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investment in CSR. Nigeria according to UN has an estimated population of 155 million as at 2009, 
with average annual population growth rate of 2.1%, and surface area of 923768 square kilometers 
(data.un.org). This population density and the abundance of natural resources make Nigeria to be an 
attractive market for many businesses as well as their sources of raw material.   
Ajadi (2006) identified specific drivers of CSR in Nigeria which include the failure of the government 
to develop the country, and the history of conflict and waste in the extractive industry in the Niger-
Delta region. He therefore, suggests that CSR activities in Nigeria should be aimed at addressing the 
peculiarity of the social economic development challenges of the country (poverty alleviation, health 
care provision, infrastructural development, structure and education).    
Prior studies on CSR in Nigeria focused on the multinational oil and gas companies and other 
multinationals. This is due to the major impact of oil and gas operations on the environment and the 
companies are making huge profits from their operations in Nigeria. In the same Nigerian economy, 
business organizations are facing infrastructural challenges which include incessant power outage, bad 
roads, and insecurity of investment and property (Osemene, 2012), which make business activities 
unstable. In his analysis, he argues that manufacturing sector is not sound due to inadequate 
infrastructure among other factors. Moreover, sequel to the social and economic difficulties in Nigeria, 
and in light of the benefits that manufacturing companies are driving from the country, society’s 
expectations and ethical values are highly expected from the Nigerian Manufacturing sector.   
With the re-emergence of CSR in the present globalized business environment, particularly in the 
context of tans-nationalization of business operations and the support of UN as well as other Social 
and Human Rights activists to improve the quality of lives of local communities, through the 
mechanisms of CSR, manufacturing firms in Nigeria are claiming CSR in their policies and reporting 
investments in CSR activities across different areas in the country. However, firms’ activities 
particularly those with financial implications have market consequences.   
Hence, the need for understanding how the market response to CSR of manufacturing companies in 
Nigeria.   
1.1 Aim and Objectives of the Study  
The main aim of this research is to assess the impact of corporate social responsibility on the market 
values of listed manufacturing firms in Nigeria. While the specific objectives of the research are:  
i. To examine the impact of Corporate Social Responsibility in Society on the market values of 
listed manufacturing firms in Nigeria.  
ii. To investigate the effect of environmental sustainability activities on the market values of listed 
manufacturing firms in Nigeria.  
iii. To assess the impact of CSR with regard employees on the market values of listed manufacturing 
firms in Nigeria.  
iv. To examine the effect of CSR value maximization on  the market values of listed 
manufacturing firms in Nigeria.  
v. To assess the impact of regulatory compliance on the market values of listed manufacturing 
firms in Nigeria.   
1.2 Research Hypotheses   
In line with the research objectives, the following hypotheses are formulated in null form;   

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H01: Corporate Social Responsibility on Society has no significant impact on the market values of listed 
manufacturing firms in Nigeria.  
H02: Corporate Social Responsibility on environmental sustainability has no significant impact on the 
market values of listed manufacturing firms in Nigeria.  
H03: Corporate Social Responsibility on employees has no significant impact on the market values of 
listed manufacturing firms in Nigeria.  
H04: Corporate Social Responsibility on value maximization has no significant impact on the market 
values of listed manufacturing firms in Nigeria.  
H05: Compliance with regulatory requirements has no significant impact on the market values of listed 
manufacturing firms in Nigeria.  
1.3 Scope and Significance of the Research 
The increasing concerns about ethical business issues and the demand for socially responsible 
businesses and how their operations maximizes value in Nigeria make this study a necessity. The study 
is expected to benefit policy makers (Government), Human Rights Agencies, the general public, 
managers, shareholders and researchers. However, the study is restricted to listed manufacturing 
companies that are involved in the production of chemicals and similar products. The study covers the 
period of six years (2008-2013).   
2.0 Literature Review   
2.1 Conceptual Analysis  
Although CSR defies definition, scholars defined the concept in relation to their understanding and the 
nature of the social and environmental issues involved. Jones (1980) defined CSR as the notion that 
corporations have an obligation to constituent groups in society other than stockholders and beyond 
the law or union contract, indicating that a stake may go beyond ownership. According to Frederick, 
Post and Davis (1992) CSR is a principle stating that corporations should be accountable for the effect 
of any of their actions on their community and environment. In view of Reder (1994), CSR is an all-
encompassing notion, and refers to both the way a company conducts its internal operations, including 
the way it treats its workforce, and its impact on the world around it. While Hopkins (1998) see the 
concept as concerned with treating the stakeholders of the firm ethically or in a socially responsible 
manner. He further explains that stakeholders exist both within a firm and outside and thus socially 
responsible behavior will increase the human development of stakeholders within and outside the firm. 
In all of these definitions, CSR reflects stakeholders’, social and environmental dimensions.   
Woodward-Clyde (1999) defined CSR as a contract between society and business wherein a community 
grants a company a license to operate and in return the matter meets certain obligations and behaves 
in an acceptable manner. In the same perspective Kilcullen and Kooistra (1999) defined the concept as 
the degree of moral obligations that may be ascribed to corporations beyond simple obedience to the 
laws of the state.   
In a broader perspective, the World Business Council for Sustainable Development (1999) defined CSR 
as the commitment of business to contribute to sustainable economic development, working with 
employees, their families, and the local communities and society at large to improve their quality of 
life. While in the words of Business for Social Responsibility (2000) CSR means operating a business 
in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society 

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has of business. It further states that, social responsibility is a guiding principle for every decision made 
and in every area of business. And, therefore, CSR is achieving commercial success in ways that honour 
ethical value and respect people, communities and the natural environment.  
CSR according to UK Government (2001) refers to the private sector’s wider commercial interests and 
the requirement to manage its impact on society and the environment in the widest sense. While CSR 
to the European Commission (2001), is whereby firms integrate social and environmental concerns in 
their business operations, and in their interaction with their stakeholders on a voluntary basis. From 
the same perspective, McWilliams and Siegel (2001) defined CSR as actions that appear to further 
some social good, beyond the interests of the firm and that which is required by law. These definitions 
reflects stakeholders’ dimension and see CSR as voluntary activities. On the contrary, Marsden (2001) 
argues that CSR is about the core behaviour of firms and the responsibility for their total impact on the 
societies in which they operate. He further emphasized that CSR is not an optional add-on nor is it an 
act of philanthropy. And that a socially responsible business is one that runs a profitable business that 
takes account of the positive and negative environmental, social and economic effects it has on society.  
Lea (2002) sees the concept as voluntary act whereby firms go beyond the legal obligations to manage 
the impact they have on the environment and society. According to him, the concept covers firm’s 
employees, suppliers, customers and the community, and the extent to which firm protect the 
environment. However, the Global Corporate Social Responsibility Policy Project (2003) sees the 
concept as global corporate social responsibility and defined it as business practices based on ethical 
values and respect for workers, communities and the environment. Van Marrewijk (2003) refers 
corporate sustainability and CSR to company activities that include social and environmental concerns 
in business operations and interactions with stakeholders on voluntary basis.   
In all these definitions of CSR, there are five definitions that are identified which include; 
environmental dimension, social dimension, economic dimension, stakeholders dimension and 
voluntariness dimension.  
However, looking at the political agenda and the initiative of different international organizations, like 
UN Global compact and European Commission, CSR assumed a new dimension. The new dimension 
is based on the challenge brought about by globalization and internationalization of business 
operations (Aaronson and Reeves, 2002b). A review of literature by Laura et al (2008) shows that CSR 
public policies and some social and environmental challenges are borne by the transnationalization of 
business operations in a global economy. Based on this, a new concept of CSR emerged, that is, CSR is 
the outcome of global business operations, from which corporations will have to take responsibility of 
their operations on society (Zadek et al., 2001). In this regard, CSR covers all social and environmental 
challenges of the transnationalization of business operations, which include welfare state 
transformation and social governance (Laura et al., 2008). In sum, CSR in all dimensions entails some 
levels of responsibilities by corporate organizations that improve social, economic and environmental 
conditions of the communities within which corporation operate. CSR according to Reputex (2003) 
cited in Finch (2005) has four major components that together make organization to be socially 
responsible and also sustainable in the long-run; these are: Environmental impact, Social impact, 
Workplace practice, and corporate governance.  

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However, Zerk (2006) and Triple Bottom Line quoted in Norman and MacDonald (2003) argue in 
favour of this and summarized the components of CSR with respect to communities as follows: 
Economic, Social, and Environmental. Therefore, for the purpose of this research, the main focus area 
should be corporate CSR activities in the communities in the context of economic, social and 
environmental contributions.  
Prior researchers have argued and documented a substantial literature on the benefits of CSR 
engagement, which together contribute to better financial performance and the long-term survival of 
a firm (deMacarthy, 2009). According to Orlitzky, Schimdt and Rynes (2003) CSR is an organizational 
resources from which both internal and external benefits can be derived.    
The internal benefits of CSR to corporate organization are that, investments in CSR assist in developing 
new competences, resources, and capabilities that would be reflected in organization’s culture, 
technology, structure, and human resources (Russo & Fouts, 1997). In addition, CSR assists 
organization to develop managerial competencies even if the environment is dynamic or complex, 
because defensive activities necessitate significant employee involvement, firm-wide coordination, and 
a forward-thinking managerial style (Shrivastava, 1995). However, CSR in this regard assists 
management in developing proper process, skills, and information system capable of strengthen the 
firm readiness to address external changes and crises (Russo & Fouts, 1997). Similarly, under internal 
benefits perspective of CSR, internal competences generated through CSR process should lead to 
efficient utilization of organizational resources (Majumdar & Marcus, 2001). These internal benefits of 
CSR according to Orlitzky et al. (2003) develop internal capabilities and organizational efficiency 
irrespective of whether CSR activities and practices are disclosed to outside stakeholders. 
On the other hand, a major benefit of CSR from external perspective is good organizational reputation. 
Under this view, communication of CSR performance levels by firms to external constituents assist in 
building a positive image with customers, investors, bankers and suppliers (Fombrun & Shanley, 
1990). They further state that, disclosure of high levels of CSR involvement by organization is an 
informational signal from which stakeholders assess organization’s reputation. Organization may also 
use their CSR reputation to enhance their relationships with bankers and investors; therefore, CSR 
facilitates access to capital (Greening & Turban, 2000). Moreover, firm’s CSR reputation is a 
mechanism for improving employees’ goodwill, which will lead to an increase financial performance 
(Orlitzky et al., 2003).  
CSR is also considered beneficial according to Heal (2004) in terms of conflicts resolution between 
corporation and society; since most of the conflict between firms and society arise from either 
discrepancy between private and social costs and benefits, or different perception of what is fair. It is 
from this perspective that Heal (2004) asserts that CSR is mechanism through which conflicts between 
business organization and society can be resolved.  
By extension, CSR is also beneficial in resolving environmental conflicts, that is, through careful 
response to environmental issues such as greenhouse emission and other environmental pollution 
(Heal, 2004). Capital market performance is another benefit of CSR involvement, the recent growth of 
socially responsible investing which is directed to socially responsible firms affect the market position 
of those firms positively (Heal, 2004). 

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Sprinkle and Maines (2010) see the benefits of CSR performance in terms of increased cash inflows to 
firms or reduced cash outflows. They further lament that, organizations that involved in CSR benefits 
from tax deductions garnered by cash and product donations, similarly, tax credits are provided to 
socially responsible firms by local, state and federal agencies. These tax credit incentives according to 
them come in terms of sale-tax exemptions and property-tax abatements.  
Another critical benefit that firms drive from CSR engagement is free advertising as a result of CSR, 
that is, organizations that do involve in CSR performance receive coverage on local, national and 
international radio and television, and be the subject of articles in newspapers, trade journals, and 
magazines (Sprinkle & Maines, 2010). This should save firms from investing a huge amount of money 
on advertising and promotional activities.   
2.2 Review of CSR Theories 
Agency view of business entity and its responsibility to society was founded by the 1976 Nobel 
Memorial Prize recipient for economic science ‘Friedman’. Under this perspective, managers after 
meeting the financial needs of the firm, they then need to be socially responsible (Finch, 2005). 
According to him, this can be realized through firm’s governance, workplace practices and 
environmental and social impact and conforming to society’s expectations and ethical values. This idea 
of using shareholders’ fund to engage in CSR was criticized (Gelb and Stawser, 2001). Friedman (1970), 
states that the business entity is responsible only to its shareholders (owners), and its social 
responsibility is to maximize the value of the owners. He further stressed that engaging in CSR is a sign 
of an agency problem or a conflict of interest between the agents (managers) and the principal 
(shareholders). Based on this, he concludes that managers use CSR as a means of promoting their own 
social, political or career agenda at the expense of shareholders (McWilliams and Siegel, 2001).  
However, the emergence of Corporate Social Performance (CSP) view in the early 1980s accounted for 
the shift from the agency view framework. Corporate social performance view came to light from the 
researches by Preston (1978) and Carroll (1979) whose study documented a CSP framework. Using the 
CSP framework Waddock and Graves (1997) tested the CSP model and found a positive association 
between financial performance and CSP. This has addressed the silent issue in agency view, where the 
contention remains that firm’s resources are utilized in CSR without any benefit from such action. In 
another empirical work of Pava and Krausz (1996) which disproved the notion in agency view that, CSR 
would lead to reduced levels of financial performance, they found opposite and conclude that, socially 
responsible firms performed as well or better than their counterparts that do not engaged in CSR. One 
of the strength of CSP view is the philosophy of social responsiveness, social issues and economic 
responsibilities (Finch, 2005).  
On the other hand, resource-based view is on similar framework with CSP view with the addition that, 
CSP not only increases financial performance but it also adds a competitive advantage to the 
organizations (Finch, 2005). That is, committing resources to CSR could improve financial position 
and the competitive advantage of firm.  
Supply and demand view is credited to McWilliams and Siegel (2001). The proposed a supply and 
demand framework which entails that, there is a level of CSR investment that maximizes profit, while 
satisfying stakeholder demand is seen as important to maximize profits. This supply and demand 

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theory of CSR places the emphasis on the stakeholders as the primary focus of all CSR activities (Finch, 
2005).  
Stakeholder according to Freeman (1984:46) is, “…any group or individual who can affect or is affected 
by the achievements of organization objectives”. Stakeholder theory is built on the notion that firm is 
not only responsible to shareholders, but other constituents including the society who affect or are 
affected by the operations of the firm (Post and Preston, 2002). Freeman (1984) further laments that 
adequate attention to stakeholders interest is critical to firm success, and therefore, management must 
pursue actions that are optimal for a general class of stakeholders, rather than serving to maximize  
Shareholders interest alone (Gelb and StawseR, 2001).   
Therefore, recently corporations have changed their attitudes significantly by rejecting agency view 
and adoptingstakeholders view by integrating CSR concept in their corporate strategies (Mc Williams 
and Siegel, 2001). In this direction, the proponents of stakeholder view assert that CSR will lead to the 
improved financial performance, competative advantage, as well as long-term success (Pava and 
Krausz, 1996; Russio and Fouts, 1997).  
Stakeholders in the context of CSR are classified into two; that is, primary and secondary stakeholders 
(Clackson, 1995). Wood and Jones (1995) see primary stakeholders as those groups that the 
corporation depends on for its survival. Primary stakeholders therefore include the stakeholders, 
investors, employees, customers, government and the local communities. Secondary stakeholders on 
the other hand, are those constituents that do not engage in any form of transactions with the firm but 
influence or affect the firm’s operations. This form of stakeholder refers to the natural environment 
and could be extended to future generation (Jensen, 2002, and Capron, 2003). Considering the 
stakeholders as an integral part of a business is on the premise of three major roles they play within 
the business environment (Wood & Jones, 1995a). Stakeholders are the basis of measuring what 
comprise desirable and undesirable firm’s performance. Secondly, they define corporate norms and 
social behaviour and lastly they evaluate the outcomes of firm’s behaviour in respect of meeting their 
expectations. Therefore, Agrawal and Maneet (2011) opine that corporations must seek to meet the 
demands of the stakeholder’s particularly social and environmental issues. It is on this ground that 
Frynas (2005) and Ellerman (2001) state that stakeholders should be allowed to have an active role in 
the firms and communities relationships in projects implementation. For instance, in Nigeria there is 
stakeholders consultation in most of the community development project carried out by multinational 
oil companies (Rowlands, 2003), however, other sectors of the economy are not seem to be taking CSR 
so important to this extent. In this research, stakeholder’s theory is preferred.  
While stakeholder’s theory remains the logical framework for CSR, recently globalization of business 
operations led to the addition of global economy view to the stakeholders CSR framework. The view is 
on the notion that CSR is the consequences of transnationalization of business activities in the 
Globalized economic sense. As a result of this, Zadek et al., (2001) opine that CSR can best be 
understaood as a consequence of global business operations, due to which firms will have to take 
greater account of their impacts on society.   
This is influence by some factors such as the changing role of government. Crane and Matten (2004) 
state that, in the traditional context, government was the dominant and the regulators while the 
companies are dependent.  

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However, globalization has changed this due to the shift in economic power, that is, the government 
now has a dependent role while the companies have the dominant role (Crane and Matten, 2004). The 
view is supported by the fact that globalization brought about a new economic relationship which span 
beyond national boundaries. As such, CSR is seen as an important tool for creating and integrating 
global challenges into corporate strategies and governance (Zadek, 2001 and Midttun, 2004). 
Following global economy view, this research subscribe to global economy view beside stakeholders 
view.  
3.0 Research Methodology  
There are two major ways of assessing market reaction to business activities, these are; individual 
investor’s reaction and aggregate stock market reaction. This study employs the aggregate stock market 
reaction. This method relates share prices to specific aspect of a firm to draw conclusion about the 
phenomenon of interest. However, correlation research design is adopted to assess the impact of CSR 
activities on the market values of the listed manufacturing firms in Nigeria. The study used secondary 
data from the financial statements of the sampled firms for the period of six years (2008-2013).   
The population of this study comprises of all the 48 firms that are into manufacturing of chemicals and 
other related items listed on the floor of the Nigerian Stock Exchange (NSE) Market as at 31st 
December, 2013. However, 19 firms succeeded as the sample size of the study based on two criteria; all 
the firms that were not in the NSE listing for all the period (2008 through 2013) covered by the study 
were filtered out; and those with difficulties in accessing their data are also dropped.  
3.1 Technique of Data Analysis and Models Specification  
The study employed Ordinary Least Squares (OLS) multiple regression technique of data analysis, after 
testing the effect of the problems of heteroskedasticity.   
This is because the traditional OLS in the presence of heteroskedasticity provide spurious regression 
problem that can lead to statistical bias. Thus, OLS technique is considered in this paper because it is 
very powerful in statistical estimation, and examining the impact of one variable on another. The 
analysis is conducted using Statistics/Data Analysis Software (STATA 11.0).   
Variables Measurement and Model Specification 
Corporate social responsibility is divided into its five main areas (society activities, environmental 
sustainability activities, employees’ relations, owners’ value maximization and regulatory 
compliances); while on the other hand, market reaction is proxy by the market values of ordinary 
shares. The measurements of the variables used in this study are presented in Table 1 below;  
Table 1: Variables Measurements  

Variables   Measurements   

Market Values   Measured by the share prices 90 days after the end of 
accounting period   

Society CSR   Measured by total expenditures on the society in the 
areas of health, education and other things at the end of 
accounting period, as reported in the financial 
statements.   

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Environmental  
Sustainability   

Measured by total expenditures on the environment in 
the areas of pollution (air, water and land) and similar 
environmental problems at the end of accounting period, 
as reported in the financial statements.   

Employee CSR   Measured by total expenditures on the work force at the 
end of accounting period, as reported in the financial 
statements.   

Owners’ Wealth 
Maximization   

Measured by returns on equity, net income divided by 
the total equity.   

Regulatory 
Compliance   

Measured by dichotomous variable, 0 if a firm was 
reported violating rules and regulations during an 
accounting period, and 1 for otherwise.   

Industry Variable   Measured by dichotomous variable, 1 if a firm is among 
the long reputable firms in the Nigerian capital market, 
and 0 for otherwise.   

 
The model of the study is mathematically expressed as follows;  
MKTVALit = γ0 + β1SOCTYit + β2ENVRONit + β3EMPLOYit + β4OWNERSit + β5RCOMPLit + 
β6INDTRYit +  
µit.............................................................................................i   
Where 
MKTVALit  =  market values per share of firm i in year t  
SOCTYit  =  expenditures on society activities of firm i in year t  
ENVRONit  =  expenditures on environmental sustainability of firm i 

in year t  
EMPLOYit  =  expenditures on employees of firm i in year t  
OWNERSit  =  owners’ value maximization of firm i in year t  
RCOMPLit  =  regulatory compliances of firm i in year t  
INDTRYit  =  industry type of firm i in year t, as control variable  
Intercept   =  γ0  
Estimators    =  β1, β2, β3, β4, β5 & β6  
Residual    =  µit  
All the variables (society, environment and employees) are scaled by assets net book value to address 
the problem of size differences.  
4.0 Results and Discussions  
This section covers the analysis and interpretation of the data collected for the study; the section begins 
with the descriptive statistics and then inferential statistics of the data.  
4.1 Descriptive Statistics   
This section presents the description of the data collected for the study; the summary of the descriptive 
statistics of the data collected is presented in Table 2 as follows; 
 

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Table 2: Descriptive Statistics 

Variables   Mean   SD   Min   Max     N   

MKTVAL   63.1259   202.4835   1.5600   1022.00   144   

LNMKTVAL   2.1828   1.5746   0.4447   6.9295   144   
SOCTY   0.0384   0.0713   0.0017   0.6181   144   
ENVRON   0.0214   0.0747   0.0000   0.5576   144   
EMPLOY   0.3722   0.1149   0.1042   0.6104   144   
OWNERS   0.0113   0.0572   -0.1599   0.2215   144   
RCOMPL   0.9737   0.1608   0.0000   1.0000   144   
INDTRY   0.5439   0.5003   0.0000   1.0000   144   

Source: STATA OUTPUT (Appendix 1)   
Table 2 shows that our measure of capital market response to social responsibility activities, market 
values (MKTVAL) has an average value of N63.12 with standard deviation of N202.48, and minimum 
value of N1.56 and N1022.00 as the maximum value. The standard deviation of 202.48 suggested that 
the data deviate from the mean value from both sides by N202.48, implying that there is a wide 
dispersion of the data from the mean because the standard deviation is higher than the mean. Although 
the sample firms are from different sectors, this could leads to the problem of heterogeneity in the 
analysis. However, the data is transformed using natural logarithm, which brought the mean value 
to2.1828 with standard deviation of 1.5746, and the minimum and maximum values of 0.4447 and 
6.9295 respectively.  
The table also shows that the average value of society (SOCTY) expenditure is  
0.0384 with standard deviation of 0.0713, and minimum and maximum values of 0.0017 and 0.6181 
respectively. That is, on average the sample manufacturing firms spent 3.84% of their net asset on the 
society during the period, while the minimum and maximum values are 0.17% and 61.81% respectively. 
The standard deviation of 0.0713 suggested that the data deviate from both sides of the mean value by 
0.0713, implying that there is a wide dispersion of the data from the mean because the standard 
deviation is higher than the mean. The table on the other hand shows that the average value of 
environmental (ENVRON) expenditure is 0.0214 with standard deviation of 0.0747, and minimum 
and maximum values of 0.0000 and 0.5576 respectively. That is, on average the sample manufacturing 
firms spent 2.14% of their net asset on the environmental sustainability during the period, while the 
minimum and maximum values are 0% and 55.76% respectively.   
The standard deviation of 0.0747 suggested that the data deviate from both sides of the mean value by 
0.0747, implying that there is a wide dispersion of the data from the mean because the standard 
deviation is higher than the mean value.  
  
The descriptive statistics from table 2 indicates that the average value of employees (EMPLOY) 
expenditure is 0.3722 with standard deviation of 0.1149, and minimum and maximum values of 0.1042 
and 0.6104 respectively. That is, on average the sample manufacturing firms spent 37.22% of their net 
asset on their employees during the period, while the minimum and maximum values are 10.42% and 
61.04% respectively. The standard deviation of 0.1149 suggested that the data deviate from both sides 
of the mean value by 11.49%, implying that there is no wide dispersion of the data from the mean value. 

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Similarly, the table shows that the average value to the shareholders (OWNERS) is 0.0113 with 
standard deviation of 0.0572, and minimum and maximum values of -0.1599 and 0.2215 respectively. 
That is, on average the sample manufacturing firms provide a return on equity of 1.13% during the 
period, while the minimum and maximum returns on equities are -15.99% and 22.15% respectively. 
The standard deviation of 0.0572 suggested that the data deviate from both sides of the mean value by 
0.0572, implying that there is a wide dispersion of the data from the mean because the standard 
deviation is higher than the mean value. 
Similarly, table 2 shows that on average 97.37% of the sample manufacturing firms during the period 
comply with relevant regulations (RCOMPL), from the mean value of 0.9737 with standard deviation 
of 0.1608, and minimum and maximum values of 0.0000 and 1.0000 respectively. The standard 
deviation of 0.1608 suggested that the data deviate from both sides of the mean value by 16.08%, 
implying that there is no wide dispersion of the data from the mean value. Moreover, the table shows 
that the industry variable (INDTRY) has an average value of 0.5439 with standard deviation of 0.5003, 
and minimum and maximum values of 0.0000 and 1.0000 respectively. That is, on average 54.39% of 
the sample manufacturing firms belong to the most active sectors of the economy. The standard 
deviation of 0.5003 suggested that the data deviate from both sides of the mean value by 50.003%, 
implying that there is a wide dispersion of the data from the mean value.   
Therefore, the descriptive statistics of the data collected for the variables of the study shows the nature 
and the extent of the dispersion of the data, which to a large extent suggested that the data did not 
follow the normal curve.   
Therefore, the test of data normality is conducted and the results indicate that only the data from the 
employees and industry variables follow the normal curve (see appendix 2). Because the P-values are 
not significant at all levels of significance, suggesting that the null hypothesis (that, the data is normally 
distributed) is not rejected.   
However, a further data reliability test is applied to avoid those factors that could bias our results. 
Hadri Langrange Multiplier (LM) test for unit root is applied to ascertain whether the data of the 
variables is stationary or not, the results of the tests is presented in table 3  
Table 3: Unit Root Test  

Variables   No. of Panels   No. of Periods   Z-Statistic   P-Values   

MKTVAL   19   6   0.2297   0.4092   
SOCTY   19   6   1.7668   0.0386   
ENVRON   19   6   0.1101   0.4562   
EMPLOY   19   6   0.6115   0.2704   
OWNERS   19   6   0.3029   0.3810   
RCOMPL   19   6   -1.4457   0.9259   
INDTRY   19   6   -1.1919   0.8834   

 Source: STATA OUTPUT (Appendix 3)  
Hadri LM test for panel data employs the null hypothesis that all the panels are (trend) stationery. The 
results from table 3 show that only SOCTY variable has unit root (that is, non-stationery) from the p-
value of 0.0386. Thus, the null hypothesis that the data is stationery is rejected. On the other hand 

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table 3 indicates all the remaining variables are stationery because the p-values are not statistically 
significant at all levels of significance. 
Having analyzed the descriptive statistics and normality of the data, the inferential statistics of the data 
collected from which the hypotheses of the study are tested are presented and interpreted in the 
following section.    
4.2 Correlation Results 
In this section, the summary of the Pearson correlation Coefficients of the variables of the study are 
presented in Table 4 as follows  
Table 4: Correlation Matrix 

Variables   MKTVAL   SOCTY   ENVRON   EMPLOY   OWNERS   RCOMPL   INDTRY   

MKTVAL   1.0000               
SOCTY     

0.5819   
(0.0000)   

1.0000   
  

          

ENVRON   0.9300   
(0.0000)   

0.3841   
(0.0000)   

1.0000           

EMPLOY   0.0181   
(0.8486)   

-0.2029   
(0.0304)   

0.0714   
(0.4502)   

1.0000         

OWNERS   0.7622   
(0.0000)   

0.0068   
(0.9427)   

0.8123   
(0.0000)   

0.1999   
(0.0330)   

1.0000       

RCOMPL   -0.1891   
(0.0440)   

-0.2167   
(0.0206)   

-0.1673   
(0.0752)   

0.2336   
(0.0124)   

-0.0820   
(0.3859)   

1.0000     

INDTRY   -0.0375   
(0.6923)   

-0.2318   
(0.0131)   

-0.0476   
(0.6153)   

-0.1146   
(0.2271)   

0.1262   
(0.1809)   

0.0625   
(0.5089)   

1.0000   

 P-Values in Parentheses  
Source: STATA OUTPUT (Appendix 4) 
The results from Table 4 indicate a significant positive association between market values (MKTVAL) 
and society responsibility (SOCTY) from the correlation coefficient of 0.5819 which is statistically 
significant at 1% level of significance (pvalue of 0.0000). This result implies that market significantly 
responded to CSR activities of the sample manufacturing firms during the period of the study. That is, 
CSR in terms of society is relevant to the Nigerian capital market as indicated by the significant positive 
relationship in this study. Similarly, the results from the Table indicate a strong significant positive 
association between market values (MKTVAL) and environmental sustainability (ENVRON) from the 
correlation coefficient of 0.9300 which is statistically significant at 1% level of significance (p-value of 
0.0000). This result also implies that market significantly responded to CSR activities of the sample 
manufacturing firms during the period of the study. That is, CSR in terms of environmental 
responsibility is relevant to the Nigerian capital market as indicated by the significant positive 
relationship in this study.  
Table 4 indicates a positive association between market values (MKTVAL) and employees’ 
expenditures (EMPLOY) from the correlation coefficient of 0.0181 which is not statistically significant 
at all levels of significance (p-value of 0.8486).  

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This result implies that market does not significantly respond to CSR activities of the sample 
manufacturing firms during the period of the study, in terms of employees’ responsibility. That is, CSR 
in terms of employee is not relevant to the Nigerian capital market as indicated by the insignificant 
relationship in this study. However, the results from the Table indicate a strong significant positive 
association between market values (MKTVAL) and shareholders’ value (OWNERS) from the 
correlation coefficient of 0.7622 which is statistically significant at 1% level of significance (p-value of 
0.0000). This implies that market significantly responded to CSR activities of the sample 
manufacturing firms during the period of the study, in terms of owners’ wealth maximization. That is, 
CSR in terms of generating value to owners of the business is relevant to the Nigerian capital market 
as indicated by the significant positive relationship in this study. On the contrary, the results from the 
Table indicate a significant negative association between market values (MKTVAL) and regulatory 
compliances (RCOMPL) from the correlation coefficient of -0.1891 which is statistically significant at 
5% level of significance (p-value of 0.0440). This implies that investors restrained when there is high 
regulation and this could affect market values negatively. Lastly, the result shows a lack of significant 
association between market values (MKTVAL) and the type of industry (INDTRY) from the correlation 
coefficient of -0.0375 which is not statistically significant at all levels of significance (p-value of 
0.6923). This implies that the market does not consider industry in the valuation of firms. Following 
the analysis of the relationships among the variables of the study, the regression results from which 
the hypotheses of the study are tested are presented and analyzed in the following section. 
4.3 Regression Results of the Model   
This section presents and analyzes the regression results of the model as presented in table 5 below;   
Table 5: Summary of OLS Regression Results of the Model  

Variables   Statistics   P-Values   

R2   0.9581     
Adjusted R2   0.9558     
F-Statistic   408.06   0.0000   
Hettest: Chi2   2.66   0.1027   
Mean VIF   2.52     
Random Effect Test: Chibar2   0.62   0.2157   

Source: STATA OUTPUT (Appendix 5, 6, 7, & 9)  
This study adopts Panel data which does not usually meet all the classical assumptions of OLS, as such 
the study subjected the model to some robustness tests. The results in table 5 show an absence of 
Heteroskedasticity in the panel as indicated by the Breuch Pagan/Cook-Weisberg test for 
heteroskedasticity Chi2 of 2.66 with pvalue of 0.1027. That is, the null hypothesis that the variance of 
the residuals is constant (homocedastic) is not rejected. Homocedasticity is an OLS assumption that 
usually leads to Best Linear Unbiased Estimators (BLUE). Moreover, the table indicates the absence of 
the perfect multicolinearity among the explanatory variables, as shown by the mean Variance Inflation 
Factor (VIF) of 2.52. The decision criterion for the VIF is that a value of 10 and above implies the 
presence of perfect collinearity. On the other hand, the table shows from the result of random effect 
test, Breusch and Pagan Lagrangian Multiplier Test for Random Effects, that there is no statistical 
significant variance among the units in the panel (Chibar2 of 0.62 with p-value of  

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0.2157), implying that OLS technique is the most appropriate for the study.  
Table 5 indicate that the explanatory variables of the study explained 95.58% of the total variations in 
the dependent variable (market values) of the sample manufacturing firms during the period of the 
study, from the adjusted coefficient of determinations (adjusted R2 of 0.9558). Similarly, the table 
shows that the model is fit from the F-Statistic of 408.06 which is significant at 1% level of significance 
(P-value of 0.0000). Following the fitness of the model, test of hypotheses formulated in this study is 
conducted in the following section. 
4.4 Hypotheses Testing  
The study tests the hypotheses formulated for the study, Table 4.7 presents the coefficients of the 
variables of the study from which the hypotheses are tested.  
Table 6: OLS Estimators  

Variables   Coefficients   t-values   P-Values   

SOCTY   0.5879   15.24   0.000   
ENVRON   0.6692   10.63   0.000   
EMPLOY   -0.0057   -0.29   0.771   
OWNERS   0.3964   8.63   0.000   
RCOMPL   0.0044   0.39   0.695   
INDTRY   0.0068   1.46   0.146   
CONSTANT   0.0049   0.55   0.584   

 
Source: STATA OUTPUT (Appendix 5)  
The results from table 6 show that CSR on society (SOCTY) has a significant statistical positive impact 
on the market values of listed manufacturing firms in Nigeria, from the coefficient of 0.5879 with t-
value of 15.24 which is statistically significant at 1% level (p-value of 0.000). This suggests that, a N1 
increase in CSR on society, market value increases by 58.79k, this implies that CSR on society is valued 
by the market. Based on this, the study rejects the null hypothesis one (H01) which states that Corporate 
Social Responsibility on Society has no significant impact on the market values of listed manufacturing 
firms in Nigeria. The study therefore infers that market response positively to the CSR on society in 
Nigeria. Table 6 also shows that CSR on environmental sustainability (ENVRON) has a significant 
statistical positive impact on the market values of listed manufacturing firms in Nigeria, from the 
coefficient of 0.6692 with t-value of 10.63 which is statistically significant at 1% level (p-value of 
0.000). This suggests that, a N1 increase in CSR on environmental sustainability, market value 
increases by 66.92k, this implies that CSR on environmental sustainability is value relevant to the 
market. Based on this, the study rejects the null hypothesis two (H02) which states that Corporate Social 
Responsibility on environmental sustainability has no significant impact on the market values of listed 
manufacturing firms in Nigeria. The study infers that market response positively to the CSR on 
environmental sustainability in Nigeria during the period covered by the study.   
Moreover, table 6 indicates that CSR on employees (EMPLOY) has a negative impact on the market 
values of listed manufacturing firms in Nigeria, from the coefficient of -0.0057 with t-value of -0.29 
which is not statistically significant at all levels of significance (p-value of 0.771). This suggests that, a 
N1 increase in CSR on employees, market value decreases by 00.57k, but is not statistically significant. 

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Based on this, the study failed to reject the null hypothesis three (H03) which states that Corporate 
Social Responsibility on employees has no significant impact on the market values of listed 
manufacturing firms in Nigeria. The study therefore infers that market did not significantly response 
to the CSR on the employees in Nigeria during the period under review. Similarly, the Table shows that 
CSR on value maximization (OWNERS) has a significant statistical positive impact on the market 
values of listed manufacturing firms in Nigeria, from the coefficient of 0.3964 with t-value of 8.63 
which is statistically significant at 1% level (p-value of 0.000). This suggests that, a N1 increase in CSR 
on owners’ value maximization, market value increases by 39.64k, this implies that CSR on owners’ 
value maximization is value relevant to the market.   
Based on this, the study rejects the null hypothesis four (H04) which states that Corporate Social 
Responsibility on owners’ value maximization has no significant impact on the market values of listed 
manufacturing firms in Nigeria. The study infers that market response positively to the CSR on owners’ 
value maximization in Nigeria during the period covered by the study.   
Table 6 also indicates that CSR in terms of regulatory compliances (RCOMPL) has a positive impact 
on the market values of listed manufacturing firms in Nigeria, from the coefficient of 0.0044 with t-
value of 0.39 which is not statistically significant at all levels of significance (p-value of 0.695). This 
implies that market did not significantly response to regulatory compliances. Based on this, the study 
failed to reject the null hypothesis five (H05) which states that compliance with regulations has no 
significant impact on the market values of listed manufacturing firms in Nigeria. The study therefore 
infers that market did not significantly response to the CSR in terms of regulatory compliances in 
Nigeria during the period under review. Similarly, the Table shows that industry has a positive impact 
on the market values of listed manufacturing firms in Nigeria, from the coefficient of 0.0068 with t-
value of 1.46 which is not statistically significant at all levels of significance (p-value of 0.146).   
These findings implied that there are social investors in the Nigerian capital market who value social 
responsibility activities. The implication here is that, if manufacturing companies would continue to 
invest in social responsibility especially in the areas of society and environmental sustainability and 
wealth maximization, their market values could improved significantly.   
5.0 Conclusion and Recommendation   
This paper examined the how market response to the corporate social responsibility activities of listed 
manufacturing firms in Nigeria. From the results, the study concludes that corporate social 
responsibility in Nigeria is relevant and informative to investors. Especially, the study concludes that 
corporate social responsibility on society; environmental sustainability and owners’ wealth 
maximization have significantly impacted on the market values of listed manufacturing firms at 99% 
confidence level during the period covered by the study. The study however did not find evidence that 
corporate social responsibility on employees and regulatory compliances have any significant 
relationship with market values during the period under review.   
The paper recommends that manufacturing companies in Nigeria should double their efforts towards 
corporate social responsibility in Nigeria. This could send a positive message to the market and 
enhance their value in return; it will also help create conducive atmosphere for conducting business.   

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