EFFECT OF CORPORATE GOVERNANCE MECHANISMS ON CORPORATE SOCIAL RESPONSIBILITY OF NIGERIAN LISTED FINANCIAL SERVICE FIRMS

Abstract

It has been indicated in the literature that corporate governance practices play an important role in determining the corporate social responsibility (CSR) of an organization. However, CSR may differ from sector to sector. One of the sectors worth investigating is the financial sector, which this study examines. This study provides new insight from 46 selected financial service firms using Krejcie and Morgan's formula. Annual panel data sourced from the sampled firms between 2011-2020 were used. The Hausman test was conducted and the random effect model was selected as the consistent and efficient model fit for the study. The findings from the random effect model suggest that board composition and board diversity individual coefficients show strong significantly associated with the corporate social responsibility of listed financial service firms in Nigeria. While board independence and audit committee independence were found to be significant and negatively related to corporate social responsibility. Further evidence revealed that board size is not a significant predictor of corporate social responsibility. Based on the findings the study recommends financial service firms revisit the practices of audit committee independence and board diversity to enhance and improve upon such practices. Also, financial service firms should consider appointing a good number of directors for adequate supervisory and monitoring roles. By implication, these findings have demonstrated that corporate governance mechanisms influence CSR in Nigerian listed financial service firms.