EVALUATING THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON PROFITABILITY IN THE OIL AND BANKING SECTORS OF NIGERIA
Although corporate social responsibility is a means of given back to the society in place of social and environmental damage that organizations might have caused, thereby reducing communal conflict and facilitate smooth operation, however, it also serves as income leakage thereby serving a dual role. This study investigate the impact of Corporate Social Responsibility on profitability in the oil and banking sectors on Nigeria for the period of 2001 to 2010 using secondary data generated from annual reports of Royal Dutch Shell Plc and First Bank of Nigeria Plc. A correlation analysis estimated with ordinary least square method was used to evaluate the relationship between Corporate Social Responsibility expenditure and Profit before Tax of both firms while a cause and effect relationship between the two variables was established using granger causality method. The result finds a strong and significant positive relationship between Corporate Social Responsibility and profitability in both sectors which precisely implies that a unit increase in Corporate Social Responsibility expenditure will lead to an increase in Profit before Tax of both sectors. More so, no causation was found to exist between the two variables. It is therefore recommended that organizations should improve on their CSR activities, look beyond the interest of the shareholders alone but take into cognizance the interest of the society and the host community as well, while government should monitor CSR expenditure of corporate organizations to ensure compliance with extant laws and as well prevent tax evasion by overstating the CSR expenditure, all with a view to have a better by far society and a growing economy.
