Corporate Giving as Earnings Quality Signal: Some New Evidence From Nigeria

PURPOSE – The purpose of this paper is to re-examine the effect of CSR disclosures on earnings quality in Nigeria beyond the conventional wisdom of statistical significance. DESIGN/METHODOLOGY/APPROACH – The sample consists of 300 company-year observations from 2013 to 2018 of listed companies on the Nigerian Stock Exchange. The research hypothesis was tested using multivariate linear regression on the total sample and subsamples. A pre-study statistical power analysis was carried out to ensure that the study is adequately powered to detect an effect if it exists. FINDINGS – The main results suggest that corporate giving is not related to earnings quality. Though additional analysis for the income-decreasing subsample was statistically significant, the effect size for both the primary and additional analyses is weak, negligible, and unlikely to be of any practical significance. The results retained their robustness after further analysis. PRACTICAL IMPLICATIONS – The findings could inspire policymakers and regulators to shift attention to other areas of CSR that matter. It could also serve as an input to the current debate on CSR, especially the ongoing consideration of a Bill for an Act to regulate corporate giving in Nigeria. ORIGINALITY/VALUE – This is probably the first paper to provide a critical results index needed for substantive comparison of future studies. Hence, the paper serves as a baseline for future research on the topic.