EFFECT OF CORPORATE SOCIAL RESPONSIBILITY EXPENDITURE ON THE VALUE OF LISTED PHARMACEUTICAL FIRMS IN NIGERIA

Abstract

This study investigates the impact of corporate social responsibility (CSR) expenditures on the market capitalization of listed pharmaceutical firms in Nigeria. Specifically, it examines the effects of environmental protection costs, community development costs, employee welfare costs, and ethical compliance costs on market capitalization using data from 2019 to 2023. The research adopts an ex- post facto design, analyzing secondary data from annual reports of five randomly selected Nigerian pharmaceutical companies. The findings revealed significant positive relationships between all tested CSR expenditure categories and market capitalization. Environmental protection costs, community development costs, employee welfare costs, and ethical compliance costs exhibit statistically significant coefficients, indicating their respective influences on market valuation. These results suggest that investments in CSR activities contribute significantly to enhancing the financial performance and market competitiveness of pharmaceutical firms in Nigeria. The study's regression model achieves a moderately strong explanatory power (adjusted R-squared = 0.6104), indicating that approximately 61.04% of the variance in market capitalization can be explained by the examined CSR expenditures. These findings underscore the strategic importance of CSR and ethical practices in driving financial performance within the Nigerian pharmaceutical sector.