SOCIAL ACCOUNTING PRACTICES AND PROFITABILITY OF COMPANIES IN NIGERIA
The concept of economic activity reporting is extended to include social welfare activities in which a company is to invest in and also report to its entire stakeholders. Sometimes companies are reluctant to invest in social activities because of the subjective nature of social activities which make it difficult for comparing costs and associated benefits, thus making accounting for these classes of activities complex. The motivation of this work is the claim of the stakeholders’ theorist that Social Accounting practices enhance economic benefits of companies. In this study, effort was made to examine the relationship between Health Related Cost (HRC) and Return on Equity (ROE) of companies in Nigeria. Descriptive research design was adopted in the study. Data for the study were obtained from financial report of fifteen (15) companies, that were purposively selected from Oil and Gas, Manufacturing, and Building and Construction sector of the Nigerian economy from 2009 to 2015. This resulted in 105 observations. However, descriptive statistics and multiple regression were the analytical tools adopted for the study. The hypothesis was formulated and tested using F statistic. This null hypothesis was not supported since a positive coefficient of 0.039 was obtained for the main independent variable of the study, but the relationship was not significant because F calculated (Fcal)value of 1.204 was lesser than the critical F(Ftab) value of 2.45 at 5% level of significance. It was found that Social Accounting Practices variable – HRC has insignificant positive relationship with ROE of Companies in Nigeria. It was concluded from the study that, investment in social activities has insignificant positive relationship with ROE of Companies in Nigeria; and recommended among others that, companies may cautiously support health issues that will enhance Companies’ economic benefits in the long-run.
Keywords: Social Costs, Social Accounting, Social Accounting Practices, Health Related Costs (HRC), Profitability
Aburime, U. (2016). Determinants of Profitability: Macroeconomic Evidence from Nigeria. Department of Banking and Finance, University of Nigeria, Enugu Campus, pp1-34 http://ssrm.com/abstract=1231064.(Retrieved on 9th October, 2016)
Adeyemi, S. and Ayanlola, O. (2015). Regulatory perspective for deeping CSR disclosure practice in Nigeria. African Journal of Business Management, 9(6): 270-287
Akbar, S. (1995). Social Responsibility Accounting, Sustainability Accounting and Islam. University of Wollongong Theses Collection 1954-2016. 285p http:llro.uow.edu.au/thesis/1005.(Retrieved on 27th August, 2016)
Aluko, M., Odugbesan, O., Gbadamosi, G. and Osuagwu, L. (2004). Business Social Responsibility and Management Ethics, p141-151. Lagos: Longman.
Awan, M. (2014). The impact liquidity, leverage, and inflation on firms’ profitability: An empirical analysis of food sector of Pakistan. IOSR Journal of business and Management, 16 (1): 104 -112.
Bassey, E. Sunday, O. and Eton, E. (2013). The impact of environmental accounting reporting on organizational performance of selected oil and gas companies in Niger Delta Region of Nigeria. Research Journal of Finance and Accounting, 4(3): 57-73.
Bastain, B., Laura, E. and Staffan S. (2014). How to use the GIR - G4 guidelines and ISO 26000 in conjunction, pp1- 42 http://www.globalreporting.org & http://www.iso.org. (Retrieved on 26th July, 2016).
Burja, C. (2011). Factors influencing the companies’ profitability. Annalensis series Oeconomica 13(2): 215 - 224.
Companies and Allied Matters Acts (CAMA), 2004: With Companies Proceeding Rules, Companies Winding-Up Rules 2001, Company Regulation 2012 and Investment and Securities Act 2007, 884p.
Daferighe, E. (2010). Environmental accounting and degradation. A quarterly Journal of Association of National Accountants of Nigeria, 18(4): 55-65.
Damagum, Y. (2010). Voluntary corporate information disclosure and image promotion in Nigeria amidst financial crisis. Nigerian Academy of Management Journal, 4 (2): 58-65.
Drehmann, M. and Nikolaou, K. (2013). Funding liquidity risk: definition and measurement. Journal of Banking and Finance, 37: 2173-2174
Duke, J. and Kankpang, K. (2013). The implication of corporate social responsibility for the performance of Nigerian firms. Advances in Management and Applied Economics, 3(5) 73-87.
Ebiringa, O., Yadirichukwu, E. and Okochukwu, O. (2013). Effect of firm size and profitability on corporate social disclosure: The Nigerian oil and gas sector in focus. British Journal of Economics Management and Trade 3(4): 563-574.
Ehi-Oshio, O., Adeyemi, A. and Enofe A. (2013). Determinants of corporate profitability in developing economics. European Journal of Business and Management, 5(16): 42 -50.
Emre, H. (2013). Determinant of banks profitability: An investment on Turkish banking sector. Ocak, 10 (37): 103-110.
Folajin, O, Ibitoye, O, and Dunsin, A. (2014). Corporate social responsibility and organisational profitability: An empirical investigation of United Bank for Africa (UBA) PLC. International Journal of Academic Research in Business and Social Sciences, 4(8): 205 -214.
Gray, R., Collison, D. and Bebbington, J. (1998). Environmental and social accounting and reporting. Centre for Social and Environmental Accounting Research, 1-9.
Hansen, J. (2007). Academic’s Dictionary of Accounting. Academic (India) Publishers, New Delhi, 310p.
Hermanson, R. Edwards, J. and Maher, M. (1992). Accounting Principles: 5th ed, United States of America: IRWIN, 1266p.
Ilaboya, O. and Omoye, A. (2013). Corporate social responsibility and firm performance: Evidence from Nigeria. Journal of Asian Development Study, 2 (1): 6-19.
Iya, I., Badiya, Y. and Faiza, A. (2015). Corporate social responsibility (CSR) and the performance of First Bank Nigeria Plc, Adamawa State. Journal of Emerging Trend in Economics and Management Science, 6(6): 377-389.
Mohamed, K. and Hazem, A. (2015). Determinants of profitability: Evidence from industrial companies listed on Muscat Securities Market. Review of European Studies, 7(11): 303 - 311.
Nkaiwalei, A. (2011). Relationship between Social Accounting Practices and Profitability: The Case of Oil Industry in Kenya. MSc Dissertation, School of Business Administration, University of Nairobi, 87p.
Nnaemeka, J. Onyekwelu, U. and Kevin, U. (2017). Effect of sustainable accounting and reporting on financial performance of firms in Nigeria Brewery sector. European Journal of business and innovation Research, 5 (1): 1-15.
Obehioye, U., Adeyemi, A. and Augustine, O. (2013). Determinants of corporate profitability in developing economics. European Journal of Business and Management, 5 (16): 42 -50.
Ogunbiyi, S. and Ihejinke, P. (2014).Interest rate and Deposit Money Banks’ profitability nexus: The Nigeria experience. Arabian Journal of Business and Management Review, 3(11): 133-148.
Oni, F. and Kabir, H. (2010). Corporate Social Responsibility and accounting information disclosure among companies in Nigeria. Nigerian Academy of Management Journal, 4 (2): 58-65.
Onyekwelu, U. and Uche, U. (2014). Corporate social accounting and enhancement of information disclosure among firms in Nigeria: A case of some selected firms in Nigeria. Journal of Economics and Sustainable Development, 5(6): 35- 44.
Pfarrer, M. (2010). What is the Purpose of the Firm? : Shareholder and Stakeholder Theory, p86-93
Sanusi, M. (2009). The Element of Financial Management, Jos: GO-GO International Limited, 349p
Shehu, A. (2013). The influence of corporate social responsibility on Profit after Tax of some selected Deposit Money Banks in Nigeria. Educational Research, 4 (11): 722-732.
SPSS (2011). Statistical Package for Social Sciences: User’s guide. Version 20.0 for Window, IBM Corp, Armonk, New York. 446p
Uwuigbe, U. (2011). An empirical investigation of the association between firm’s Characteristics and corporate social disclosure in the Nigeria financial sector, Journal of Sustainable Development in Africa, 13 (1): 60-74.
Zaidi, M. (2012). Social Accounting in India. Global Journal of Commerce and Management Perspective, 1 (1): 8-12
Copyright (c) 2019 Archives of Business Research
This work is licensed under a Creative Commons Attribution 4.0 International License.
You are free to:
- Share — copy and redistribute the material in any medium or format
- Adapt — remix, transform, and build upon the material for any purpose, even commercially.