State Ownership and Corporate Social Responsibility: An Investigation on Nigerian Data
DOI:
https://doi.org/10.47941/jbsm.1471Keywords:
Corporate Social Responsibility, Corporate Governance, State-ownership, Foreign and Institutional Ownership, Nigerian DataAbstract
Purpose: The paper examines the central issue underpinning the growing international literature and arguments that different ownership types have varying implications for a firm's CSR engagement. It compliments evolving studies by looking at the effect of state ownership and other types of ownership structures on CSR, specifically in the Nigerian industry. It is argued that the impact of ownership structure on corporate decisions to allocate resources to Corporate Social Responsibility (CSR) has assumed renewed significance in the burgeoning literature of developing economies, given the exigency for corporate executives to allocate firm specific resources to other social objectives that may detract from profit maximization.
Methodology: This paper differs markedly from the methodologies of previous studies which used composite CSR indices. It deconstructs CSR expenditure into five categories - public goods, socially desirable goods, corporate philanthropy, employee relations and environmental conservation - and estimates the effects of government, foreign and institutional ownership on CSR variables controlling for such factors as firm size, return on assets and capital intensity. Using new data on listed Nigerian firms, this paper carries out its empirical investigation with panel data estimation in order to deal with heterogeneity and endogeneity issues.
Findings: The findings of this paper indicate that different ownership structures have varying implications for the five forms of CSR investigated in this study. It reveals that government ownership has no significant effect on CSR expenditure on public goods, corporate philanthropy and environmental conservation. However, it finds that government ownership also significantly influences CSR expenditure on socially desirable goods and employee relations.
Unique contribution to theory, practice and policy:Theoretically, this paper extends the trajectory of CSR discourse to include an elaborate investigation of the impact of ownership structures on CSR practices in all the major sectors of Nigerian economy.The paper argues that its empirical results have several policy implications for good corporate governance practices in Nigeria and other emerging economies. This paper suggests the need to institute incentives schemes and regulatory constraints that would compel government, foreign and institutional ownership to align their incentives with some forms of CSR practices.
Downloads
References
Aharoni, Y. (1986). The Evolution and Management of State-owned Enterprises. Ballinger: Cambridge Press.
Ahunwan, B. (2002). Corporate Governance in Nigeria. Journal of Business Ethics, 37, 269-287.
Bai, C-E. & Xu, L.C. (2005). Incentives for CEOs with Multitasks: Evidence from Chinese State-Owned Enterprises. Journal of Comparative Economics, 33, 517-539.
Bauer, J. (2005). Regulation and State Ownership: Conflicts and Complementarities in EU Telecommunications. Annals of Public and Cooperative Economics, 76, 151-177.
Blowfield, M. & Frynas, G. (2005). Setting new agendas: critical perspectives on Corporate Social Responsibility in the developing world. International Affairs, 81(3), 499-513.
Brown, J., Earle, J. & Telegdy, A. (2009). Employment and Wage Effects of Privatization: Evidence from Hungary, Romania, Russia and Ukraine. The Economic Journal, 120, 683 - 708.
Burns, J.L. (2000). Hitting the Wall: Nike and International Labour Practices. Journal of Business Ethics, 89(1), 1-22.
Bushee, B. (1998). The Influence of Institutional Investors on Myopic Research and Development Investment Behaviour. The Accounting Review, 73, 305-333.
Carroll, A. (1979). A Three-Dimensional Conceptual Model of Corporate Performance. Academy of Management Review, 4, 497-505.
Cavaliere, A. & Scabrosetti, S. (2008). Privatization and Efficiency: From Principals and Agents to Political Economy. Journal of Economic Surveys, 22(4), 685-710.
Clarke, T. (2005). Accounting for Enron: Shareholder value and stakeholder interests. Corporate Governance: International Review, 13(5), 598-612.
Edoho, F. (2008). Oil Transnational Corporations: Corporate Social Responsibility and Environmental Sustainability. Corporate Social Responsibility and Environmental Sustainability, 15, 210-222.
Elsayed, K. & Paton, D. (2005). The Impact of Environmental performance on firm performance: Static and dynamic panel data evidence. Structural Change and Economic Dynamics, 16(3), 395-412.
Erkut, S., Kramer, V. & Konrad, A. (2008). "Critical Mass: Does the number of Women on a Corporate Board make a difference?" in Vinnicombe, S., Singh, V., Burke, R., Bilimoria, D. and Huse, M. (Eds), Women on Corporate Boards of Directors: International Research and Practice. Cheltenham: Edward Elgar.
Erondu, E., Sharland, A. & Okpara, J. (2004). Corporate Ethics in Nigeria: A Test of the Concept of an Ethical Climate. Journal of Business Ethics, 51, 349-357.
Eweje, G. (2007). Multinational oil Companies' CSR initiatives in Nigeria: The skepticism of stakeholders in host communities. Managerial Law, 49(5/6), 218-235.
Fahlenbrach, R., Low, A. & Stulz, R. (2010). Why do Firms Appoint CEOs as Outside Directors. Journal of Financial Economics, 97, 12-32.
Fama, E. (1980). Agency problems and the theory of the firm. Journal of Political Economy, 88, 288-325.
Graves, S. & Waddock, S. (1994). Institutional Owners and Corporate Social Performance. Academy of Management Executive, 37(4), 1034-1046.
Harjoto, M. & Jo, H. (2011). Corporate Governance and CSR Nexus. Journal of Business Ethics, 100, 45-67.
Harrison, A. & Scorse, J. (2010). Multinationals and Anti-Sweatshop Activism. The American Economic Review, 100(1), 247 - 273.
Hart, O. (2003). Incomplete Contracts and Public Ownership: Remarks, and an Application to Public-Private Partnerships. The Economic Journal, 113, 69 -76.
Hassan, S.U. (2011). Corporate Governance and Financial Reporting Quality: A Case Study of Nigerian Money Deposit Bank. International Journal of Research in Computer Application and Management, 1(26), 12-19.
Hassan, S.U. & Ahmed, A. (2012). Institutional Investors and Discretionary Accruals: The Case of Listed Manufacturing Firms in Nigeria. International Journal of Advanced Research in Management and Social Sciences. 1(1), 1-16.
Himmelberg, C., Hubbard, R. and Palia, D. (1999), "Understanding the Determinants of Managerial Ownership and the Link Between Ownership and Performance", Journal of Financial Economics, Vol. 53, pp. 353 - 384.
Hutton, R, D'Antonio, L & Johnsen, T. (1998). Socially Responsible Investing. Business and Society, 37(3), 281-305.
Idemudia, U. & Ite, U. (2006). Corporate-Community Relations in Nigeria's Oil Industry: Challenges and imperatives. Corporate Social Responsibility and Environmental Management, 13, 194-206.
Idemudia, U. (2009). Oil Extraction and Poverty Reduction in the Niger Delta: A Critical Examination of partnership initiatives. Journal of Business Ethics, 90(1), 91-116.
Idemudia, U. (2010). Rethinking the Role of Corporate Social Responsibility in the Nigerian Oil Conflict: The Limits of CSR. Journal of International Development, 22, 833-845.
Ite, U. (2004). Multinationals and corporate social responsibility in developing countries: A case study of shell in Nigeria. Corporate Social Responsibility and Environmental Management, 2, 1-11.
Ite, U. (2005). Poverty Reduction in Resource-Rich Developing Countries: What Have Multination Corporations got to do with it? Journal of International Development, 17, 913-929.
Jeon, J.Q., Lee, C. & Moffet, C.M. (2011). Effects of Foreign Ownership on Payout Policy: Evidence from Korean Market. Journal of Financial Market, 14, 344-375.
Jensen, M. (1983). The Modern Industrial Revolution, Exit, and the Failure of Internal Control System. Journal of Finance, 48, 831-880.
Jensen, M. (1986). Agency cost of free cash flow, corporate finance, and takeovers. The American Economic Review, 76, 323-329.
Jensen, M. and Meckling, W. (1976), "Theory of the Firm: Managerial Behaviour, Agency Costs, and Ownership Structure", Journal of Financial Economics, Vol. 3, pp. 305 - 369.
Jiang, G., Lee, C. M. & Yue, H. (2010). Tunneling Through Inter-Corporate Loans: The China Experience. Journal of Financial Economics, 98, 1-20.
Johnson, R. & Greening, D. (1999). The effects of corporate governance and institutional ownership types on corporate social performance. The Academy of Management Journal, 42, 564-576.
Konar, S. & Cohen, M. (2001). Does the Market value Environmental Performance? The Review of Economics and Statistics, 83(2), 281-289.
Kone, S. (2006). "A Structural Model of Currency Management of Foreign Debt: Application to Developing Country Nigeria" Ph.D. Dissertation: Washington.
Lee, Min-Dong. (2009). Does Ownership Form Matter for Corporate Social Responsibility? A Longitudinal Comparison of Environmental Performance between Public, Private and Joint-Venture Firms. Business and Society, 114(4), 435 - 456.
Li, W. & Zhang, R. (2010). Corporate Social Responsibility, Ownership Structure, and Political Interference: Evidence from China. Journal of Business Ethics, 96, 631-645.
Mako, W. (2006). Facilitating Investment and Innovation: A Market-Oriented Approach to Northeast Revitalization. World Bank Report, No. 34943-CN.
Mbaku, J. M. (1992). "Bureaucratic Corruption as Rent-Seeking Behaviour Africa". In Mbaku, J. M. (ed.) (1998), Corruption and the Crisis of Institutional Reforms in Africa. Lewiston-New York: The Edwin Mellen Press.
McLean, B. & Elkind, P. (2003). The Smartest Guys in the Room. London: Viking Publishers.
McWilliams, A. & Siegel, D. (2001). Corporate Social Responsibility: A Theory of the Firm Financial Performance. Academy of Management Journal, 31(4), 854-872.
Morsing, M. (2011), "State-Owned Enterprises: A Corporatization of Governments?" Management Communication Quarterly, Vol. 25, pp. 710 - 717.
Nowotny, E. (1982). Nationalized Industries as an Instrument of Stabilization Policy: the Case of Austria. Annals of Public and Cooperative Economics, 53(1), 41-57.
Oh, W., Chang, Y. & Martynov, A. (2011). The Effects of Ownership Structure on Corporate Social Responsibility: Empirical evidence from Korea. Journal of Business Ethics, 104, 283-297.
Okafor, C.E. (2014). "Ownership and Corporate Social Responsibility: An Empirical Investigation of Data from the Nigerian Industry", Ph.D. Dissertation: Leeds University Business School.
Osamah, M. & Zoubi, T. (2005). Empirical Testing of Different Alternative Proxy Measures for Firm Size. Journal of Applied Business Research, 21(3), 79-90.
Reinhardt, F., Stavins, R. and Vietor, R. (2008), "Corporate Social Responsibility Through an Economic Lens", Review of Environmental Economics and Policy, Vol. 2, No. 2, pp. 219 - 239.
Roper, J. and Schoenberger-Orgad, M. (2011), "State-Owned Enterprise: Issues of Accountability and Legitimacy", Management Communication Quarterly, Vol. 25, 693-709.
Schwab, S.J. & Thomas, R.S. (1988). Realigning Corporate Governance: Shareholder Activism by Labour Unions. Michigan Law Review, 96, 1018-1094
See, G. K. (2009). Harmonious Society and Chinese CSR: Is There Really a Link? Journal of Business Ethics, 89(1), 1-22.
Shleifer, A. & Vishny, R. (1986). Large Shareholders and Corporate Control. Journal of Economics of Political Economy, 94(3), 461-488.
Shleifer, A. & Vishny, R. (1997). A Survey of Corporate Governance. Journal of Finance, 52(2), 737-783.
Siegel, D. & Vitaliano, D. (2007). An Empirical Analysis of the Strategic Use of Corporate Social Responsibility. Journal of Economics and Management Strategy, 16, 773-792.
Silverstein, K. (1994). Pension Funds Increase Presence in Boardrooms. Pension World, 30(5), 4-11 (May 1).
Spicer, B. H. (1978). Investors, Corporate Social Performance and Information Disclosure: An Empirical Study. Accounting Review, 53, 94-111.
Terjesen, S., Sealy, R. & Singh, V. (2009). Women Directors on Corporate Boards: A Review and Research Agenda. Corporate Governance: An International Review, 17(3), 320 - 337.
Thiemeyer, T. (1993). Deregulation in the perspective of the German Gemeinwirtschaftslehre. Annals of Public and Cooperative Economics, 76, 151-177.
Ullman, A. (1985). Data in Search of a Theory: A Critical Examination of the Relationships among Social Performance, Social Disclosure, and Economic Performance. Academy of Management Review, 10, 540-577.
Verbeek, M. (2008), A Guide to Modern Econometrics, 3rd edition, West Sussex: John Wiley & Sons, Ltd.
Waddock, S. & Graves, S. (1997). The Corporate Social Performance-Financial Performance link. Strategic Management Journal, 18, 303-319.
Wang, J. & Coffey, B. (1992). Board composition and corporate philanthropy. Journal of Business Ethics, 11, 771-778.
Wang, H., Choi, J. and Li, J. (2008), "Too Little or Too Much? Untangling the Relationship between Corporate Philanthropy and Firm Financial Performance", Organization Science, Vol. 19, No.1, pp. 143 - 159.
Wooldridge, J.M. (2002). Econometric Analysis of Cross Section and Panel Data. Cambridge, Massachusetts: The MIT Press.
Yoshikawa, T., Rasheed, A.A. & Del Brio, E.B. (2010). The Impact of Firm Strategy and Foreign Ownership on Executive Bonus Compensation in Japanese Firms. Journal of Business Research, 63, 1254-1260.
Zahra, S., Oviatt, B. & Minyard, K. (1993). Effects of Corporate Ownership and Board Structure on Corporate Social Responsibility and Financial Performance. Academy of Management Best Papers Proceedings, pp. 336-340.
Zhang, R., Rezaee, Z. & Zhu, J. (2009). Corporate Philanthropic Disaster Response and Ownership Type: Evidence from Chinese Firms' response to the Sichuan Earthquake. Journal of Business Ethics, 91, 51-63.
Zu, L. & Song, L. (2009). Determinants of Managerial Value on Corporate Social Responsibility: Evidence from China. Journal of Business Ethics, 88, 105-117.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Cyriacus Elochukwu Okafor (PhD)
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
