Value Relevance of Corporate Social Responsibility Disclosure

Abstract

Corporate social reporting is still largely voluntary. Corporate social responsibility disclosure has attracted much attention over the past years due to the challenges encountered by firms in discharging comprehensive environmental practice and disclosing environmental information in order to engage the people for their vested interest in response to such matters. The effect of economic rationality seems to have led to the inducement of corporate social disclosure (CSD), while companies exercise reasonable control over the choice to report or disclose their corporate social responsibility (CSR) related activities. The main aims of this study was to assess the extent to which value relevance impact on corporate social responsibility disclosure (CSRD) in selected firm in Nigeria. The specific objective were to evaluate the extent to which market capitalization (MCZ) influenced CSRD of selected firms in Nigeria; analyze to which extent has return on assets impacted on CSRD of selected firms in Nigeria; and investigate the extent to which volatility of stock price (VOA) influenced CSRD selected firms in Nigeria. The study employed secondary data from selected firms in Nigeria stock exchange (NSE) annual reports covered 11 years period from 2009 to 2019. The research work adopted multiple pooled ordinary least square (OLS) regression techniques for analysis. It was observed that MCZ, VOA exerts insignificant influence on CSR while return on asset (ROA) has significant impact. It also found that growth rate (GRT), cash availability (CAT) has insignificant effect on CSR while leverage(LEV) exerts significant effect. This showed that decrease in MCZ, volatility of stock price leads to decrease in CSR, hence, exhibited a weak factor among MCZ, VOA, GRT and CAT but a strong determinant on ROA. The study concludes that information about CSR is an alternative and major concern for users of financial statements to accounting information. Hence, companies are to subscribe to the detailing requirement indexes by global reporting initiatives as a standard gold for CRS disclosure.