The role of board in corporate social responsibility: A normative compliance perspective

Abstract

This paper focuses on the board’s influence on CSR among public liability companies (PLCs). The paper uses normative compliance theory to develop the theoretical framework thereby advocating and complementing other theories of CSR by using a balanced random effect regression model to estimate the relationship between board characteristics (such as board composition, diversity and size on CSR). This involved the use of balanced panel data of 174 PLCs from 2003 to 2009. The random effect estimator was used to test the specific effects of board composition, board size and board diversity on CSR of PLCs in Nigeria. The data was obtained from Nigerian Stock Exchange (NSE) factbook from 2003 to 2009. The paper found that NEDs and board size were positively significantly correlated with CSR, while the executive director was negative and significantly related with CSR. The testing of the theory in the context of Nigeria contributes to the body of knowledge on Sub-Sahara Africa, particularly Nigeria which offers a developing country perspective. The paper explores the relationship between board characteristics and CSR thereby contributing to the governance processes of listed companies and how good governance should be encouraged by understanding the board dynamics.