Impact of Social Costs on Business Reputation Among Listed Firms in Nigeria: Structural Equation Modeling Approach (Published)
There are frequent disruptive developments in the contemporary business environment, which is chaotic. A restriction is the inability of an organisation to predict future performance with certainty. To improve company performance and develop their reputation, organisations must strike a balance between the economic (removal of societal costs) and non-economic (business reputation) sides of their operations. Consequently, this study examined how social costs impact the business reputation of listed companies in Nigeria. The study used survey research designs. The population was made up of 168 firms that were listed on the Nigerian Exchange Group as of December 31, 2022. To collect primary data, a standardised and verified questionnaire was used. For the analysis, a structural equation model was employed. The results of the first hypothesis refuted the findings of the initial hypothesis, which demonstrated a strong positive correlation between social costs and business reputation. The study yields a standardised estimate of 0.840 (t-value = 8.116, p 0.001), demonstrating that social costs significantly affect the reputations of listed firms. The second hypothesis postulates a positive relationship between innovation and a company’s reputation (standardised estimate = 0.547, t-value = 4.562, p 0.001). The relationship between business ethics and reputation is still negligible, with a standardised estimate of 0.116, a t-value of 0.669, and a p-value of 0.503. The study recommends that corporate managers work harder on social responsibility to boost the reputation of their businesses. Governmental agencies in Nigeria should set up a system encouraging companies to prioritise social responsibility projects.
To succeed in the business world, organisations need to provide reliable and credible efforts to their stakeholders, to ensure that their business activities would not harm the safety of stakeholders in the area where they are operating. The operation of business conducts in recent time, changes drastically due to the emergence of an increasing number of external factors which impose on corporate performance. Hence, this study examined the impact of social costs on the financial performance of listed firms in Nigeria. The study adopted ex-post facto research designs. Secondary data sourced from the published annual reports of 52 firms, purposively selected for a period of 11 years (2008 to 2018), giving 572 firm-year observations. Data analysed by panel data regression of pooled OLS, random effects, fixed effects models and the Feasible General Least Squares (FGLS) regression for the objectives. Findings revealed that Social Costs (SOCO) had significant and positive effect on ROA (R2 = 0.42, β = 0.202, t(570) = 4.869, p < 0.05). In addition there is evidence that SOCO, firm age, firm size and leverage jointly exerted significant effect on ROA (Adj.R2 = 0.608, F(6, 565) = 5904.01, p < 0.05). The study concluded that social costs have a significant impact on the financial performance of listed firms in Nigeria. It recommended that the practice of elimination of social costs should be intensified by corporate firms to improve on their business reputation.