The Effect of Corporate Social Responsibilities on Financial Risk of Listed Oil And Gas Companies in Nigeria

Abstract

Corporate Social Responsibility (CSR) is a concept that ensures that firms particularly the Oil and Gas firms are responsible for their impact or society and environment. Thus a socially irresponsible firm may experience reputational damage which could ultimately result in financial loss. This study investigated the effect of CSR on financial risk of listed oil and gas companies in Nigeria. The study employed an ex post facto research design using es secondary data extracted from the audited annual financial reports of seven selected oil and gas firms, from 2015 to 2023. A purposive sampling technique was used to ensure the inclusion of only the companies with complete required data. The data was analyzed using regression analysis with the aid of SPSS to examine the effect of CSR on financial risk, measured by the Altman Z-Score. The results reveal a statistically significant effect of CSR expenditures on financial stability of the Nigeria listed Oil and Gas firms with F-Statistics of 6.764, P-value=0.012, and R-Square= 0.100. The researchers concluded that Corporate Social Responsibility expenditure significantly affected the financial risk of the listed Oil and Gas firm in Nigeria. The study recommended that, the management of the Nigerian Oil and Gas companies in Nigeria should strategically manage and control Corporate Social Responsibility expenditures to mitigate likely financial risk.