Corporate Social Responsibility Reporting And Executive Compensation In Nigeria

Corporate Social Responsibility Reporting And Executive Compensation In Nigeria

Chapter One

Preface

Background to the study

The increased interest in the part of business in society moment has been urged by increased attention to the mindfulness of environmental and ethical and moral issues. It means our society has come decreasingly concerned that lesser influence and success by original and transnational organisations has not been original to trouble and desire in addressing important social issues including poor treatment of workers and labourers, defective product affair and environmental declination or attendant pollution by the diligence expiring from their conditioning as it has continuously been reported in the mass media. It’s thus important for all and sundry to realize that the public has countlessly reprobated the slighting treatment by organisations and the roar for increased social responsibility by enterprises won’t vanish if these enterprises fail to respond meetly and in a timely manner to the challenges these pose for our societies.

The idea of commercial social responsibility( CSR) is one of the moral and ethical issues encompassing commercial decision timber; therefore the decision by an organisation to take over certain conditioning or chorus from it because they’re salutary or mischievous to society is a central and intermittent question. Notwithstanding, organisations ’ desire to legalize their conditioning is considered to be one of the significant provocations for their CSR performance and is accepted by numerous experimenters( Cho and Patten, 2007; Craig Deegan, 2002; De Villiers and Van Staden, 2009; O’Donovan, 2002; Van Staden and Hooks, 2007). Craig Deegan, 2002, editorialized that commercial social responsibility reporting is essential for organisations ’ long term survival and organisations need to be sure that there are no ‘ configurations in the closet ’ which may eventually be exposed, darkening the viability and character of the organisation. A company’s profitability, as well as its actuality, could be affected by its form of CSR reporting.

In Nigeria the exposure of CSR in periodic reports isn’t a obligatory process hence acting in a socially responsible manner isn’t inescapably acceptable. enterprises are principally needed to communicate their deeds or enterprise towards CSR to their stakeholders and this is generally honored as CSRR or commercial social exposure( CSD). CSR Reporting( CSRR henceforth) is largely regarded as one of the significant approaches organisations employ to make the general public accept/ authorize their CSR conditioning. Commercial social responsibility reporting is a applicable means to guarantee responsibility and translucency of accomplishments. Despite variations among countries in different regions of the world, CSRR has increased widely in both complexity and dimension over the once two decades. Although developed countries like the United States of America have introduced obligatory exposures in the reporting prerequisite which would insure translucency in commercial conditioning, in numerous developing countries like Nigeria, CSR reporting still relies on the voluntary enterprise of the reporting reality.

The challenge thus is developing effective measures to impact and ameliorate CSRR especially in developing countries. One way to insure this can be good commercial governance. Bebchuk and Fried( 2004) propose that the structure of administrative compensation is a direct outgrowth of a establishment’s governance process. therefore, while there are signs that administrative compensation as an arm of commercial governance plays significant places in CSRR; only a sprinkle of exploration workshop have been carried out to indicate this relationship. This study makes a critical examination of the contemporary CSRR literature and examines the impact of administrative compensation on CSRR in Nigeria. Despite the fact that CSR is getting more and more important and statutory, exploration still shows that Commercial Social Responsibility performance and reporting by organisations each over the globe is limited( Catanzariti and Lo, 2011). A possible reason for this circumstance is the probable dearth of capability within the significant decision makers particularly, the board of directors, who are seen to be crucial players in organisations ’ CSR achievements to interpret proper opinions concerning CSR and CSRR.

Assuming that CSRR is an outgrowth of the boards ’ opinions, this study proposes that the influence of Administrative compensation on CSRR is veritably important argued and there’s an decreasingly high quantum of literature pressing the significance of satisfied directors in boardroom opinions. It’s thus important to note that there has been limited studies with varying results carried out to link administrative compensation with the CSRR decision making process. In light of this development, this study seeks to fill these gaps by aiming to cave into the impact of administrative compensation and the posterior effect on CSRR. This is carried out by strictly reviewing formerly being literature, and latterly furnishing hints and new ideas to fill the being gaps in former exploration and also to exfoliate further light on how CEO impulses impact their CSR opinions and if this is reflected in organisation’s CSR reporting. In line with this, the study seeks to answer the question;

Statement of Research Problem

The conception of commercial social responsibility and superintendent compensation over the times has been a topical issue in academic converse. According to Jooh, Niranjan & Roh( 2010) current business inquiries have emphasized the sustainability conception due to the fact that business must meet their commercial social responsibility duties to the society alongside creating value for their shareholders in order to make a sustainable world. The performance of every establishment is vital and crucial to its uninterrupted actuality. Several factors affect the performances of a establishment amongst which are administrative compensation and commercial social responsibility. Several scholars have argued on the effect of CSR on performance of enterprises. They argue that enterprises who engage in CSR are seen socially responsible by the society and this increases their legality, character as well as patronage leading to a positive spillover effect on performance. Jooh etal.( 2010) further argued that engaging beyond compliance is immorally desirable indeed if it takes down coffers from establishment’s immediate requirements. still, Hull and McShane( 2008) argue that there are enormous costs involved in engaging in social responsibility which may affect the performance of the organisation.

multitudinous inquiries have been carried out on the impact of CSR on firm performance with clashing findings( Fauzi, 2009; Cheriuyot, 2010; Obusubiri, 2006; Margolis and Walsh, 2001 Osisioma, Nzewi & Paul, 2015; Mutuku, 2005). Also, the issue of the effect of administrative compensation on firm performance has been delved upon performing in vague and inconclusive findings revealing different patterns a in different societies and diligence( Gore, Matsunaga, & Yeung, 2003; Nyeoga, Tarus & Basweti, 2014; Aduda, 2011; Mohammad, 2015; Sigler, 2011). Administrative compensation comprises the total remuneration paid to directors. Proper remuneration of directors helps align administrative pretensions with operation pretensions. Compensation similar as stock options and cash lagniappes help motivate workers to maximize shareholders wealth. Lack of proper compensation package could beget agency conflict whereby directors end up pursuing their interest at the expenditure of shareholders. Compensation issues haven’t entered the demanded attention in Nigeria, compared to developed husbandry. still, the effect of administrative compensation on firm performance is still a subject of debate and far from conclusive. veritably little attention has been given to this area of converse by commercial directors, academics, controllers and fiscal economist as substantiated by deficit of literature. This study thus seeks to fill these gaps in literature.

Accordingly, drawing from the inconclusiveness of this area of academic converse as well as deficit of literature, the following exploration questions was be asked in this study

1. What’s the impact of administrative compensation on commercial social responsibility reporting in Nigeria?

2. What’s the impact of establishment on firm performance?

Ideal of the Study

The ideal of this study is to find out the relationship between Administrative compensation and commercial social responsibility reporting in Nigeria thereby determining the impact of administrative compensation on CSRR.

The specific objects are to

1. examine the effect of administrative compensation on commercial social responsibility reporting in Nigeria.

2. ascertain the impact of establishment size on firm performance

. Statement of Research suppositions

The following thesis stated in null form was tested in this study.

1. Administrative compensation doesn’t have significant effect on commercial social responsibility reporting in Nigeria.

2. establishment size have no significant impact on firm performance

. Compass Of The Study

This study examines commercial social responsibility, administrative compensation and establishment performance. In terms of terrain, the study was limited to Nigerian enterprises quoted on the Nigerian Stock Exchange. The study time frame was for a period of six times( 2009- 2015). The period was chosen as a result of vacuity of data.

Significance of the study

Commercial social responsibility and superintendent compensation policy are veritably vital to organisational success. The performance of any establishment to a large extent rest on the effectiveness of price system as well as its CSR. The defense for this study stems from the fact that the study was suitable to examine the common effect of commercial social responsibility and superintendent compensation on firm performance This study will prove veritably useful to policy makers as well as account interpreters as it’ll make them more informed on the effectiveness of their administrative compensation programs, their CSR as well as what drives enterprises performance.

Another significance of this study is that it contributes to being body of knowledge on the subject matter and also would help prospective experimenters who would want to conduct farther exploration in this area by furnishing a base for them to carry out their exploration.

. Limitations of the study

A limitation encountered in this study was in the area of data as data weren’t available for all quoted banks in Nigeria. This thus confined the study to make use of the number of banks available for the time period under consideration thus reducing the sample size. Also squishy dimension of variable as there’s no invariant way of measuring a particular variable.