How do product responsibility and corporate philanthropy affect firm value?

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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-enhancing 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.

Acknowledgment
This research was based on Nnamdi Azikiwe University Ph.D. Dissertation funded by the Tertiary Education Trust Fund (Tetfund), Nigeria. University of Calabar in Nigeria is highly acknowledged for funding the PhD dissertation through its Tetfund platform.

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    • Table 1. Stationarity test results for all variables of interest at 1st difference
    • Table 2. Stationarity test results for the regression residuals at level
    • Table 3. Regression residuals’ cross-sectional dependence test results
    • Table 4. Fixed effects panel regression results
    • Table 5. Hausman test results showing the appropriateness of the fixed effects model
    • Table 6. Fixed effects regression output
    • Table 7. Hausman test results for regression model 2
    • Conceptualization
      Charles Effiong, William Inyang, Florence Otuagoma, Ije Ubi
    • Data curation
      Charles Effiong, William Inyang, Inyang Inyang, Innocent Okoi
    • Formal Analysis
      Charles Effiong, William Inyang, Geraldine Mbu-Ogar, Ije Ubi
    • Investigation
      Charles Effiong, William Inyang, Florence Otuagoma, Innocent Okoi
    • Methodology
      Charles Effiong, William Inyang, Florence Otuagoma, Inyang Inyang
    • Resources
      Charles Effiong, William Inyang, Geraldine Mbu-Ogar, Inyang Inyang
    • Software
      Charles Effiong, William Inyang, Geraldine Mbu-Ogar, Ije Ubi
    • Supervision
      Charles Effiong, William Inyang, Geraldine Mbu-Ogar, Innocent Okoi
    • Validation
      Charles Effiong, William Inyang, Geraldine Mbu-Ogar, Ije Ubi, Innocent Okoi
    • Writing – original draft
      Charles Effiong, William Inyang, Geraldine Mbu-Ogar, Ije Ubi
    • Writing – review & editing
      Charles Effiong, William Inyang, Florence Otuagoma, Inyang Inyang, Innocent Okoi
    • Project administration
      William Inyang, Geraldine Mbu-Ogar, Florence Otuagoma, Inyang Inyang