Corporate Social Responsibility Disclosure, Board Independence and Share Price of Listed Financial Companies in Nigeria

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Authors: Maindo Felicia, Maryam Isyaku Muhammad and El-Maude Jibreel Gambo

Abstract

This study examined the relationship between corporate social responsibility (CSR) disclosure, board independence, and share prices of listed financial companies in Nigeria. CSR disclosure was disaggregated into environmental, social, governance, and economic dimensions to assess their individual and combined effects on market valuation, using legitimacy theory as the theoretical foundation. The study employed purposive sampling to select 24 listed financial firms and analyzed panel data from annual reports and Nigerian Exchange Group share price records covering 2016–2024. The study adopted a fixed-effects Panel Corrected Standard Error (PCSE) regression model, supported by descriptive statistics, correlation analysis, and diagnostic tests, including multicollinearity, heteroscedasticity, Hausman, and Lagrangian Multiplier tests. Three models were estimated to examine the direct effects of CSR disclosure dimensions, the effect of board independence, and the moderating role of board independence on the CSR–share price relationship. The findings indicate that environmental disclosure, governance disclosure, and board independence have positive and statistically significant effects on share prices, while social and economic disclosures are not significant. Moderation analysis shows that board independence negatively and significantly moderates the relationship between social disclosure and share price but positively and significantly moderates the relationship between economic disclosure and share price. The moderating effects on environmental and governance disclosures are insignificant. The study concludes that effective CSR disclosure, supported by strong board independence, enhances investor confidence and firm market valuation. It recommends maintaining an optimal proportion of independent non-executive directors to strengthen corporate governance, improve disclosure credibility, reduce agency problems, and enhance shareholder value.

Keywords: Corporate Social Responsibility, Board Independence, Share price, Financial Companies