Social Accounting And Financial Performance Of Non-Financial Institutions In Nigeria

Project and Seminar Material for Accountancy / Accounting

Social Accounting And Financial Performance Of Non-Financial Institutions In Nigeria


Business organizations are crucial as thry contributes significantly to national economic growth, among other things. It has a wide range of operations, making it a vital development force. Despite these pivotal roles, its actions have also contributed to heart-wrenching difficulties that need to be addressed urgently in society in order to achieve its economic objectives. As a result, the study investigated the effect of social accounting on the financial performance of non financial institutions. Data from the Nigerian Stock Exchange was used in the study, which spans the years, 2012 to 2019. Using panel data techniques, the data was analyzed. Social accountability has a significant and positive effect on the return on equity, according to the study. According to the findings, the study concluded that social accounting is the most widely used of the three pillars of sustainability (social, environmental and economic accounting) in the Nigerian companies. The study recommends that companies should be more socially responsible by providing basic amenities to their local communities and people, as this will contribute to a long- term boost in their financial success.

Keywords: Social Responsibility, Social Contract, Financial Performance, Return on Equity.

Table of Content

  • Title Page
  • Certification
  • Dedication
  • Acknowledgement
  • Table of Content
  • List of Tables
  • Abstract

Chapter One:


  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Objective of the Study
  • 1.4 Research Questions
  • 1.5 Research Hypothesis
  • 1.6 Significance of the Study
  • 1.7 Scope of the Study
  • 1.8 Limitation of the Study
  • 1.9 Definition of Terms
  • 1.10 Organisations of the Study

Chapter Two:

Review of Literature

  • 2.1 Conceptual Framework
  • 2.2 Theoretical Framework
  • 2.3 Empirical Review

Chapter Three:

Research Methodology

  • 3.1 Research Design
  • 3.2 Population of the Study
  • 3.3 Sample Size Determination
  • 3.4 Sample Size Selection Technique and Procedure
  • 3.5 Research Instrument and Administration
  • 3.6 Method of Data Collection
  • 3.7 Method of Data Analysis
  • 3.8 Validity of the Study
  • 3.9 Reliability of the Study
  • 3.10 Ethical Consideration

Chapter Four:

Data Presentation and Analysis

  • 4.1 Data Presentation
  • 4.2 Analysis of Data
  • 4.3 Answering Research Questions
  • 4.4 Test of Hypotheses
  • 4.5 Discussion of Findings

Chapter Five:

Summary, Conclusion and Recommendation

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendation
  • References

Chapter One


1.1 Background of the Study

Social Accounting Practices were introduced in 1930 by Berle, A. A and Means, C. G. at Harvard University, United States of America (USA) during the Great Depression of 1929 -1939 that led to the collapse of many companies. Thereafter, Social Accounting became an issue in the United Kingdom in 1970 (Bastian, Laura and Staffan, 2014), but today, accounting for social impact of business activities has become a global practice based on Global Reporting Initiative (GRI) and International Standards Organisation (ISO) framework. The published ISO standards are frequently translated and adopted as a national standard by the ISO members.

Social Accounting Practices are seen by leadership of companies as more than a collection of initiative motivated by business benefit, but a means of generating competitive advantage that may enhance economic benefits, because companies have a great deal of flexibility within Social Accounting framework. They go through the process in different ways and report on the process differently; to fit their needs and requirements (Nkaiwalei, 2011). However, the issues that represent a company’s Social Accounting Practices focus vary by company, size, sector and geographical region.

Investment in Social Activities may result in the creation of assets or liabilities. Therefore, managers of companies have to balance their need to make a profit and social consideration. Although the theory of Social Accounting and empirical research carried out in the developed nations showed that Social Accounting Practices (SAP) increase the financial performance of companies, this supposition is yet to be verified in less developed nations such as Nigeria. Measuring the benefits associated with SAP is extremely challenging, if not impossible. Daferighe (2010), observed that valuation is an important input into social cost-benefit analysis and that valuing societal costs is both difficult and controversial. The concept of economic activity reporting is extended to include social welfare activities where businesses are not only responsible to their shareholders but also to the entire stakeholders. Companies are sometimes reluctant to increase their investment in Social activities because of the associated costs which include: cost of collating, cost of preparing the required information and cost of disseminating information. Also, the cost associated with SAP can be so high that for proper appreciation, it requires that the expected benefits be reported also. However, the benefit of SAP is quite difficult to measure in monetary terms. It is not clear if Social Accounting practices pose a burden on the financial performance of companies in Nigeria. This study therefore is carried out to examine social accounting and financial performance of non-financial institutions in Nigeria.

1.2 Statement of the Problem

Almost every individual, business, and nation in the world aspires to be more productive (Nadeem et al., 2018). As a result, the performance of the country’s business organizations and its long-term viability have been at the forefront of most discussions among governments, academics, policymakers, economists, researchers, and the general public. The bottom line of these debates may or may not be related to the key role that industry plays in determining how well a country achieves its macroeconomic goals. According to Kenny (2019), the manufacturing sector for example is viewed as a particularly significant sector in an economy because of its ability to generate broad and efficient backward and forward connections among other sectors, whereas Kayode (2000) called the manufacturing sector as the engine room of any economy(Utile et al., 2017). The acceptance of shareholder happiness as the fundamental goal of the corporation, on the other hand, has caused the traditional economic business model to be reliant on making money, either through the payment of dividends from profits or through capital increase in share prices (LarrinagaGonzale et al., 2002). As a result, additional stakeholders who bear the brunt of negative externality associated with the chain of activities involved in the process of converting input to output receive little or no attention. As a result, the majority of business organizations in Nigeria are frequently challenged with societal concerns (Agbiogwu et al., 2016). This is due to host communities’ dissatisfaction with basic social amenities such as good roads, electricity, safe drinking water, healthcare services, educational facilities, limited employment opportunities, and exploitation of workers whose quality of life is below subsistence, poor working conditions, and low pay.

Litigations, agitations, kidnappings, disturbances, killings, youth restiveness, violence, pervasive insecurity ravaging the land, and the unintended end of most companies in Nigeria are some of the unintended consequences of not only governments but also most of these artificial persons’ actions and inactions. Equally concerning are capitalist tendencies, which have resulted in a significant socioeconomic divide between the rich and the poor among Nigerians. Despite the fact that it has always existed and will continue to exist in some form or another, it has widened significantly in recent years. If left unchecked, this will result in unrealized human potential and a sustained decline in social mobility. The entire result is abject poverty. According to the World Poverty Clock (2020), 40.1 percent of Nigerians live in extreme poverty, with 105 million people living on less than $1.90 per day. In light of these circumstances, the study evaluate social accounting and financial performance of non-financial institutions in Nigeria.

1.3 Objectives of the Study

The major of this study is to critically examine social accounting and financial performance of non-financial institutions in Nigeria. By extension, this study will specifically;

  1. Explore the concept of social accounting.
  2. Discuss the problems of social accounting practices in Nigeria.
  3. Analyze the impact of social accounting on the financial performance of non-financial institutions in Nigeria.

1.4 Research Question

The study will be guided by the following questions;

  1. What does the concept of social accounting connotes?
  2. What are the problems of social accounting practices in Nigeria?
  3. What is the impact of social accounting on the financial performance of non-financial institutions in Nigeria?

1.5 Research Hypotheses

  • Ho: Social accounting has no significant effect on the financial performance of non-financial institutions in Nigeria.
  • Ho: Social accounting has a significant effect on the financial performance of non-financial institutions in Nigeria.

1.6 Significant of the Study

The study would serve as evidence to support or refute the claim that Social Accounting Practices enhance economic result of companies in Nigeria. Hopefully, the findings of this study would influence management strategies and would enable management to understand the implications of investment in Health issues.
Additionally, subsequent researchers will use it as literature review. This means that, other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regards to social accounting and financial performance of non-financial institutions in Nigeria.

1.7 Scope of the Study

This study covers on social accounting and financial performance of non-financial institutions in Nigeria. The study made use of secondary data, and shall cover a period of 8years from 2012 to 2019.

1.8 Limitation of the Study

This study consists of a limited population for the purposes of research. The study also covered a short period of time, yet for better results the time period could be extended to 8 years to capture the effect of the variables more comprehensively.

The study used regression analysis while other methods could have been considered to enhance good interpretation of the factors in consideration. Lastly the study was limited to the non-financial institutions in Nigeria and hence the findings cannot be generalized for financial institutions.

1.9 Definition of Terms

Social Accounting

Social Accounting is that branch of accounting that assists a company to be accountable to its entire stakeholders in all its operations and activities. Social Accounting Practices relate to the collation and communication of data -financial, quantitative and/or qualitative about an organization’s interactions with society (Gray, Collison and Bebbington, 1998).

Company Performance

Company performance is the measurement of performance through which it is possible to measure the capacity and efficiency of the organization and management.

1.10 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, definition of terms etc.
  • Chapter two highlight the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study.

Chapter Five

Summary, Conclusions and Recommendations:

5.1 Introduction

This chapter summarizes the findings on social accounting and financial performance of non-financial institutions in Nigeria. The chapter consists of summary of the study, conclusions, and recommendations.

5.2 Summary of the Study

In this study, our focus was to examine social accounting and financial performance of non-financial institutions in Nigeria. The study was specifically set to explore the concept of social accounting, discuss the problems of social accounting practices in Nigeria, and analyze the impact of social accounting on the financial performance of non-financial institutions in Nigeria.

Panel data approach with EViews 0.10 was utilized as the statistical instrument for the investigation. On the one hand, social accountability was quantified using social responsibility spending; on the other hand, financial performance was examined using the criterion variable of return on equity created from the financial statements of the study companies.

5.4 Conclusion

In light of the findings of this study, which demonstrated that social accounting had a statistically positive effect on the financial performance of companies in Nigeria.

According to the findings, social accounting is used in the Nigerian companies, but it is still in its infancy and so has little impact on company financial performance. This explains why the companies, which is recognized to be crucial to global economic growth and development, is malfunctioning in Nigeria, with negative effects for society.

5.4 Recommendation

Because their interaction with society has social implications, the study recommended that companies in Nigeria be more socially accountable by providing basic amenities such as good roads, electricity, drinking water, health care, education, and job opportunities to their community of place and persons. This will assist them in achieving a return on investment.

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