Corporate Social Responsibility Disclosures and Financial Performance of Listed Deposit Money Banks in Nigeria: Does Board Independence Matters?

Abstract

This study examines the effect of Corporate Social Responsibility (CSR) disclosures on the financial performance of listed Deposit Money Banks (DMBs) in Nigeria, with a particular focus on the moderating role of board independence. The study uses secondary data collected from the annual reports of 14 listed Nigerian banks between 2014 and 2023. A panel regression model was employed to analyze the data. The results reveal that while CSR disclosures have a small positive effect on financial performance, as measured by Return on Equity (ROE), the effect is not statistically significant. However, the interaction between CSR disclosures and board independence shows a statistically significant positive effect on financial performance, indicating that board independence enhances the effectiveness of CSR disclosures. This suggests that while CSR alone may not significantly influence financial performance, an independent board plays a crucial role in amplifying the potential benefits of CSR initiatives. Based on these findings, the study recommends that policymakers promote regulations that encourage both CSR disclosures and board independence in the Nigerian banking sector to enhance financial performance, transparency, and accountability.