“How do product responsibility and corporate philanthropy affect firm value?”

Satisfying the consumer and contributing to societal well-being have been globally acknowledged, and these developments consequently boost corporate image, attract investors, increase stock prices, enhance firm value, and enable industrial and other firms to contribute to national development. This paper examines how product responsibility and philanthropy affect the performance of industrial goods firms in Nigeria. A sample of 7 firms was selected from 24 listed firms after employing a judgmental sampling technique and using secondary data and a quantitative research method. Data validation and analysis were aided by econometric views statistical software, panel data regression, fixed and random effects estimators, stationarity test, cross-section dependence test, Durbin-Watson test, and Hausman test. The study revealed that investment in product responsibility, as evidenced by the rising stock turnover rate, is value-en-hancing in Nigeria {B1 = 0.076807, P = 0.0171 or P < 0.05}, while philanthropic donation is value destroying {B1 = –0.369535, P = 0.5817 or P > 0.05}. It was concluded that consumers’ confidence in corporate institutions can enhance corporate value, while investment in philanthropy is not usually value-enhancing when done irresponsibly and non-strategically. The study, therefore, recommended that investment in product responsibility should be consolidated to sustain the rising stock turnover rate, while investment in philanthropy should be done strategically and responsibly to make it value-enhancing.


INTRODUCTION
The social dimension of corporate social responsibility includes the well-being of employees, product responsibility and consumer protection, good corporate citizenship, human rights, sponsorship, and charity (Niskala et al., 2009 as cited in Jokinen, 2012).There is currently a growing need all over the world for business practices to be economically, environmentally, and socially friendly.Shareholders and other stakeholders usually have confidence in business enterprises that support social initiatives and, at the same time, achieve their profit-maximization objective.When too much emphasis is being continuously placed on making a high profit, a bad public image for the business will be created in the future, especially when the negative impacts of business operations on society are jettisoned (Barnett & Vaicys, 2000 as cited in Hamidu et al., 2018).
From 2003 to 2021, i.e. 19 years precisely, the financial statements of seven (7) companies in the industrial goods sector of Nigeria revealed a persistent decline in return on equity even when the rate of stock turnover (a measure of evidence of product responsibility) reached the required 5 to 10 times industry average.The rate of stock turnover even rose above 12 times in some years, making the authenticity and validity of the financial statement information of these companies an enigma or puzzle.There was, therefore, no direct link between the rising annual stock turnover rate (an indicator of product responsibility) and corporate value (measured as return on equity).During the same period, a persistent increase in philanthropic donations, which should have ideally boosted the corporate image of these companies, did not have any direct link with return on equity.It, therefore, becomes a puzzle when increasing evidence of product responsibility or rate of stock turnover and rising corporate donations fail to enhance corporate value.There was definitely no apparent justification for the persistent decline in return on equity when stock turnover rates and philanthropic donations were rising.The foregoing scenarios constitute a threat to the wealth maximization objectives and going concern of the companies involved, which, if not immediately addressed, might lead to conflicts between management and shareholders.Agency costs and risks will arise, and shareholders might consequently be forced to withdraw their investments to where they will earn better returns.It is in the light of the above-mentioned scenarios that this study was carried out.

LITERATURE REVIEW AND HYPOTHESES
The 1984 Edward Freeman's stakeholder theory of corporate social responsibility and 2004 Bigg's business ethics theory provide the basis for this paper.Business success, according to Freeman, is enhanced when all stakeholders are carried along and are satisfied.
Similarly, Bigg asserted that profitability and business relations are sustained and enhanced by behaving ethically.Unhealthy business practices according to Bigg, will cause problems for business owners and their enterprises.The relationship between the aforementioned theories and the current study is justified by studying how product responsibility and philanthropy affect profitability.
For corporate profitability to improve, consumers and society should be carried along.
The social responsibility concept, according to Eze and Bello (2016), has existed for over 30 years, and they reported in their study that various scholars made dogged attempts to define the concept, but they all ended up defining it according to their upbringing, interests, and experiences without arriving at any acceptable definition.It is also not easy to know the Nigerian company that started the practice of social responsibility.However, ReDahlia (2022) asserted that the award of scholarships to children of serving and retired employees by UAC Nigeria Plc began in 1948, and the company, according to ReDahlia, is presently supporting edu-cation through 'Goodness League Initiative' and 'Schools Support Programme'.Socially responsible organizations such as low-profit limited liability companies, Social Purpose Corporations and B Corporations have emerged (Stobierski, 2021).
In Nigeria, civil society organizations have come together to support social causes.For example, at Nnewi, in Eastern Nigeria, a business cluster trading on auto spare-parts provides city-wide security for the development of their local community (Amaeshi et al, 2006).Over N43 billion was mobilized by business operators in the private sector to fight COVID-19 in Nigeria through the collaboration between the Central Bank of Nigeria and Aliko Dangote Foundation (Olatunji, 2020 Two determinants of stock turnover rate, namely, customer perceptions and customer satisfaction, both defined as product attributes, benefits, trust, commitment, and customer behavioral loyalty, were found to have positive effects on organizational financial performance (Liang et al., 2009).Profitability and market share in the banking sector had a positive relationship (Etale et al., 2016).Sales promotion, another determinant of stock turnover rate, had a significant relationship with organizational performance (Ubabuike, 2020).The majority of respondents acknowledged during the course of the research that sales promotion (determinant of stock turnover rate) has an impact on the volume of sales and organizational performance.To sum up, the efficient utilization of sales promotional tactics results in a rise in sales volume and ultimately elevates earnings (Odunlami & Ogunsiji, 2011).
Liao (2020) used the Two-stage Heckman selection model to investigate how the social responsibility of making donations towards social initiatives leads to change in companies' financial performance and found that donations and firm performance had a positive relationship.Rehman and Jun (2020) discovered in their study that a linear relationship exists between philanthropy and stock returns.The relationship between philanthropy and performance becomes stronger when a company has greater public visibility and better past performance (Wang & Qian, 2011).The current paper is, therefore, an attempt to fill the foregoing research gaps.This paper hypothesized that when companies in Nigeria's industrial goods sector fulfill their social responsibility of producing products and services that satisfy consumers and donate towards social initiatives, corporate profitability is enhanced.
This paper, therefore, aims to examine how product responsibility and corporate philanthropy affect the value of industrial goods firms in Nigeria.
Based on the foregoing survey of literature, the study developed the following hypotheses: Investing in the fulfillment of a company's product responsibility will have a significant positive effect on corporate value.
H 2 : Investing in the fulfillment of a company's responsibility of donating towards social initiatives will have a significant positive effect on corporate value.

METHODOLOGY
The study adopted the ex-post facto research design after purposively selecting a sample of 7 industrial goods firms from a study population of 24 listed firms using a period scope of Prior to regression analysis, all the study variables and residuals in the two regression models were subjected to a stationarity test and cross-section dependence test.These tests were carried out to establish the validity and reliability of the models.
The Hausman test was used to determine whether or not the random effect or fixed effect model was appropriate for the study.

RESULTS
In Table 1, stationarity test results showed that all the key variables and control variables were stationary at 1 st difference implying that the two regression models were fit for analysis.For a robust study to be conducted and to establish the validity and reliability of the two regression models, stationarity tests of the regression residuals were carried out, and these residuals were stationary at level as required as table 2 indicates.
Diagnostic tests conducted for all the study variables and residuals in the models prior to regression analysis.

Testing hypothesis two
Pooled OLS regressions followed by fixed and random effects estimators were tried, leading to the Hausman test that showed a probability value of 0.0000 lower than 0.05, indicating that the fixed effects model is appropriate (see Table 7).

DISCUSSION
A relationship between product responsibility and corporate value was hypothesized, and this was positively significant.This confirms that the consuming public in Nigeria's industrial goods sector buys more from companies that produce good quality products, charge fair prices, and behave transparently in the marketplace.This study has established that what customers want from these companies is honesty and sincerity.Companies' involvement in the fulfillment of economic responsibilities should not prevent them from enhancing the satisfaction of the consuming public.

CONCLUSION
The main purpose of this study was to examine the extent to which two categories of social dimensions of corporate social responsibility, namely product responsibility and philanthropic donations, affect the value of companies in the industrial goods sector of Nigeria.This study concludes that product responsibility can enhance corporate value and can make a company have a long-standing relationship with its customers.It enables the consuming public to have the courage and confidence in those companies they come in contact with, and this can, in turn, add value to the company.
The non-significant negative relationship between philanthropic donations and corporate value leads to the conclusion that not all corporate philanthropic gestures are value-enhancing.Managers ought to be aware that support for social causes becomes profitable when done responsibly and strategically.This research paper, therefore, helps managers to make socially responsible business decisions required in our present-day marketplace.It also provides an opportunity for business leaders to satisfy the needs of customers and society as they go about achieving corporate success and contributing to society's development.
The construct of product responsibility can be further decomposed into other components such as pricing, product quality, product availability, and safety and separately operationalized by future researchers using primary data as the current study used only the rate of stock turnover, secondary data obtained from financial reports to measure product responsibility.Furthermore, this study analyzed only 7 industrial goods firms, and it was not possible at the time of conducting this research to include all the industrial goods firms and firms from other industries in the study sample.Future research in this study area should go for a sample size that is bigger so that results that are more robust can be obtained.To have unbiased outcomes, future researchers should get samples from other industries to accommodate consumers and other stakeholders who perceive firms' social responsibilities differently.The outcomes of this study are limited to Nigeria and other developing countries with similar circumstances and may be different from those of developed countries when considerations are given to economic status, culture, lifestyle, and other related factors.The current study attempted to examine only two elements of the social dimension of corporate social responsibility, namely, product responsibility and corporate philanthropic donations.Future research works may consider other aspects of social dimensions of corporate social responsibility like employee well-being, good corporate citizenship, human rights, and sponsorship.
ROE it -return on equity of the 7 listed firms for 19 years, β 0i -intercepts of the 7 listed firms, β 1 -β 5 -regression coefficients, RST it (RST represents turnover{TON} in Model 1 above.Please see also tables 1, 4 and 5) -rate of stock turnover of the 7 listed firms for 19 years, DON it -donations made by the 7 listed firms for 19 years, TAS it -total assets of the 7 listed firms for 19 years, IVC itinvested capitals of the 7 listed firms for 19 years, BVE it -book value of equity of the 7 listed firms for 19 years, NOS it -number of shares of the 7 listed firms for 19 years, μ it -the error term representing the effects of independent variables not considered in the model of the 7 listed firms for 19 years.

Table 1 .
Stationarity test results for all variables of interest at 1 st difference Source: EViews 9 results of stationarity test.

Table 2 .
Stationarity test results for the regression residuals at levelSource: EViews 9 results of stationarity test.

Table 5 .
Hausman test results showing the appropriateness of the fixed effects model Source: EViews 9 -Hausman Test Results, 2022.

Table 7 .
Hausman test results for regression model 2