NAME: BELLO YUNUS OLADOTUN REG NO: SMS/09/ACC/00767 PROJECT PROPOSAL

CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY

Over the last decades in Organization for Economic Cooperation and Development (OECD) countries, increasingly more firms are certifying as socially responsible. Although by no means a new issue, the social responsibility of companies have received increasing attention in the last 20 years. This study will cover corporate social responsibility in a unique framework according to the reasons why companies engage in it, the objects and the addressers of the activities involved. Corporate Social Responsibility (CSR) disclosure has now become a key strategy issue for companies. CSR disclosure is in line with to meet the needs of the firms responsibility to the shareholders and other stakeholders. It strives to meet the expectation of its operating environment. Corporate Social Responsibility (CSR) has grown to play a significant and important role in directing and defining the way organisations do business. Epstein (1987, p. 104), in his article on Business Ethics, Corporate Social Responsibility and Corporate Social Responsiveness, conceives CSR as, relating primarily to achieving outcomes

from organisational decisions concerning specific issues or problems which (by some normative standard) have beneficial rather than adverse effects upon pertinent stakeholders.

1.2 STATEMENT OF THE PROBLEM

Many studies have concentrated on the relationship between CSR disclosure and financial performance but no clear association has yet been found. Therefore, for this study, the relationship is studied by testing two sub-hypotheses; that is, the relation with market performance (stock market return indicator) and financial performance (return on equity indicator).

1.3 RESEARCH QUESTIONS

1. Do the firms have good CSR disclosure policies and financial performance? 2. Does CSR have a significant effect on financial performance of the firm and what is the significant effect? 3. Is the CSR disclosure of the Banking Industry more than the Manufacturing Industry?

SIGNIFICANCE OF THE STUDY

The number of CSR enterprises has increased considerably, showing that Corporate Social Responsibility is a very interesting phenomenon and therefore must be analyzed. Growth is a crucial variable for the development of ethical conscience, and therefore the CSR. The research is aimed at the shareholders on the impact of the CSR disclosure to the view of the firm. The study emphasizes on the need of CSR disclosure to the public and how the board will control and manage the affairs and finances of the firm.

1.4 RESEARCH HYPOTHESES

Hypotheses are a sensible and education-based conjectural statement whose authenticity is to be tested against the agreement between implied result and the existing body of knowledge. The research hypotheses on which this study will be conducted can be stated thus; Hypotheses 1

H0:1 0, There is no relationship between CSR disclosure and financial performance H1:1= 0, There is a relationship between CSR disclosure and financial performance
Hypotheses 2

H0:2= 0, There is no significant influence between CSR disclosure and financial performance
of a firm (accounting based indicators),

H1:2 0, There is significant influence between CSR disclosure and financial performance of a
firm (accounting based indicators), Hypotheses 3

H0:3= 0, the disclosure in the Banking Industry is more than the Manufacturing Industry H1:30, the disclosure in the Banking Industry is not more than the Manufacturing Industry.

1.5 SCOPE OF THE STUDY

The research will focus on the study of the CSR of the firms and their disclosure to the stakeholders at large and the impact of CSR disclosure in the achievement of the organizations objective and financial performance.

1.6 LIMITATIONS OF THE STUDY

Limitations refer to the problem and constraints militating against the successful conduct of the study which in one way or the other adversely affect the quality of the research. The study will be limited to available material in Nigeria for the conduction of this research and by time constraint. The research is also limited due to the few CSR reports available.

CHAPTER TWO LITERATURE REVIEW

INTRODUCTION Like many of management and social science concepts, corporate social responsibility is fraught with definitional problems, which makes it difficult for a uniform platform to assess firms responsiveness to it. On this plethora of definitions, Crowther and Jatana (2005) argue that social responsibility is in vogue at the moment but as a concept, it remains vague and means different things to different people. Bowen (1953), one of the early contributors on the concept, conceived corporate social responsibility as business policies and decisions, which give values to the society. Another early proponent of social responsibility, Frederick (1960), defines social responsibility as the use of societys resources; economic and human, in such a way that the whole society derives maximum benefits beyond the corporate entities and their owners. Backman (1975) considers social responsibility as other stated objectives by business, which are not directly related to economic, but rather address its negative externalities, improve employees conditions and the societal quality of life. Davis (1973) defines corporate social responsibility as the voluntary efforts by business to achieve a balance of economic goals and societal well being.

2.6 CORPORATE SOCIAL RESPONSIBILITY AND FIRM PERFORMANCE

The increasing attention to CSR is firstly based on its capability to influence firms performance. The researches in this field examine how CSR can provide firms with an incremental gain. For example, researchers have considered purchase intentions, increased sales, enhanced image, and improved employees morale as benefits of CSR. In particular, regarding to this aspect, the literature consists of three principal strands: - The existence of a positive correlation between CSR and financial results; - The lack of correlation between CSR and financial results; - The existence of a negative correlation between CSR and financial results. Some theorists of the first group (Soloman and Hansen, 1985; Pava and Krausz, 1996; Preston and OBannon, 1997) find that investments in CSR have a big return in terms of image and overall, financial results: the related benefits, in fact, are bigger than the related costs. In particular, Stanwick (1998) and Verschoor (1998), underline that a good CSR simplifies the relationship with stakeholders.

THEORETICAL FRAMEWORK
Since CSR is being viewed differently by contributors in the management literature, this study examines two major theories which appeared to have shaped their contributions. THE AGENCY THEORY Agency theory suggests the existence of a contract (Jensen and Meckling, 1976) and thus a fiduciary relationship between two people the principal and the agent (Eisenhardt, 1989), for example, employer-employee, lawyer-client, shareholders-management, etc. The idea of agency theory, is to control the substantial goal conflicts between principals and agents, particularly

where agents, by virtue of their positions, engage in opportunistic behaviour to the detriment of their principals (Fontrodona and Sison, 2006), who often find it difficult and expensive to verify the actions of their agents (Eisenhardt, 1989). The theory also mirrors the different attitudes of both the principal and the agent to risk, whereby the principal is risk neutral and the agent, riskaverse (Eisenhardt, 1989; Wiseman and Gomez-Mejia, 1998; Donaldson, 1961, Williamson, 1963).

THE STAKEHOLDER THEORY The idea of stakeholders theory was first hinted by Johnson (1971) in his definition of CSR, where he conceives a socially responsible firm as being one who balances a multiplicity of interests, such that while striving for larger profits for its stockholders, it also takes into account, employees, suppliers, dealers, local communities and the nation. The theory was later developed by Freeman (1984) and thereafter refined by various authors (e.g. Freeman, 1994; Bowie, 1991; Evan and Freeman, 1988, 1994; Freeman and Evan, 1990; Freeman and Phillips, 2002 etc). Contrary to the proponents of the agency theory, Freeman (1984) posits that managers bear a fiduciary relationship to stakeholders, whom he defines as groups or individuals who can affect or are affected by the achievement of the organizations objectives, such as stockholders, supplier, employees, customers and the local community.

CHAPTER THREE RESEARCH METHODOLOGY 3.0 INTRODUCTION

The research methodology deals with the structure of investigation aimed at identifying variables and their relationships with one another. Methodology refers to a set of rules and procedures upon which a research is based and against which claims for knowledge and assumption are evaluated for most decision making. The main aim of this section is to give some form of casual relationship and dwell on the method employed for the purpose of collecting and analyzing data for this research work.

3.2 STUDY POPULATION

According to Ojo (2005), a population or universe consists of all conceivable elements, subjects or observations that are of primary interest to a researcher or a study. The study population of this research will include manufacturing and banking industries with information data as their annual report undergoing corporate social responsibility to the communities. The research study will be focusing on the annual financial statements of the sample population.

3.3 SAMPLE SIZE AND SAMPLING TECHNIQUE

Sampling is the process of selecting representative elements (samples) from a given population. The purpose is to provide a realistic basis upon which generalization about the population may be drawn from sample characteristics.

Probabilistic sampling methods will be considered as best for study by adapting simple random sampling, this is to ensure that each element of the population have an equal chance of selection. This will promote accuracy and validity of the outcomes. The annual reports of the sampled companies will be use for this research. The sample companies comprises are of different industrial sectors namely, consumer products, industrial products, construction, trading/services, finance, infrastructure project, properties, plantations and technology. The sampling size include three Manufacturing Industries which are; Guinness Nigeria PLC, GlaxoSmithKline(GSK) Consumer Nigeria PLC, Oando PLC, and, three Banking Industries which are; First Bank of Nigeria PLC, Access Bank PLC, Stanbic IBTC Bank PLC.

3.4 DATA COLLECTION INSTRUMENT

The secondary method of collating data is to be employed. Secondary data refers to data which have been gathered earlier for some other purpose (Olu, 2005). Secondary data refers to data that are derived from already prepared sources used in the course of the research. The researcher also used secondary data sources to complement the primary sources and they include, Companys annual reports, Periodicals, conference and workshop papers, Magazines, journals, Textbooks and Internet.

3.7 DATA ANALYSIS METHOD

The data collected for this research work will be analyzed. The method to be employed in the analysis of the data collated will be descriptive analysis. The form of analytical tool to be used would be regression analysis. The regression coefficient will be computed using the Static c coefficient.