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CORPORATE SOCIAL ACCOUNTING INFORMATION DISCLOSURES AMONG FIRMS IN NIGERIA
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND TO THE STUDY
A realization in today’s corporate world is the fusion of corporate activities with those of the environment thereby making it difficult to separate the former from the latter. This goes to describe the opinion of Nzewi et al (2013) who noted that business do not operate in a vacuum but rather change of internal and external forces regarded as the environment. Uwuigbe and Egbide (2012) observed that over the past decade, Nigeria has witnessed tremendous economic and social change. As a result, the business environment is also becoming more complex and demanding. One of the emerging issues that confront modern day businesses is that of corporate social responsibility. However, due to the heightened interest in the concert of corporate social responsibility and what it entails, most research has been done in this area, particularly in the developed countries. In contrast, the developing countries are slower in responding to the increased concern about the issue of corporate social responsibility. Furthermore, Uwuigbe, (2012) stated that the state of the world’s environment and the impact of mankind on the ecology of the world have led to increased public concern and scrutiny of the operations and performances of organizations. Organizations are now expected to be able to demonstrate that they are aware and addressing the impact of their operations on the environment and society in general; thus incorporating the concept of corporate social accounting.
Corporate social accounting as a concept can be said to evolve in the United Kingdom in the early 1970s. The reporting of the social effect of companies became an issue in the UK in the 1970s (Onyekwelu and Boniface, 2014). Globalization brought to the fore, the realization that companies do not operate in isolation but have marked impact on the environment and people at the local, national and global level and this has led to the increasing awareness of Corporate Social Responsibility (CSR) and the concept of the triple bottom-line.
The concept emphasizes that a business’ success should not only be measured based on its financial performance but should include its social impact of its operation (Selvi, 2007). He further noted that the Triad craft and New Economic Foundation (NEF) pioneered a form of social accounting in the early 1990s with an aim of getting companies to voluntarily establish engagements with stakeholders. Ebimobowel (2011) also hinted that the increasing need for every organization to disclose in their annual reports the various activities that affect the society is becoming a very fundamental issue all over the world mostly in developed economies, but this is not the case in developing countries like Nigeria. This is because organizations are particularly more interested in the profit maximization objective to the detriment of the society. According to Iyoha (2010), in developing countries, the concern is about how efficient organizations are, in terms of how much profits they make and how much dividends are paid. No serious thoughts are given to social issues in the annual reports of organizations such as environmental protection, energy savings, fair business practice and community involvements etc. The exponent stress that the absence of financial data relating to actions and arrangements for social concern in Nigeria is not in accord with the trend in the USA, Europe and Canada where companies are required to report on the effect of compliance with laws governing corporate social conduct on capital expenditures, earnings and competitive position.
Oluwagbemiga, (2014) highlighted that the forces that give rise in demand of information disclosure in the modern capital market stems from the information asymmetry and the stockholders. Therefore, the solution to agency conflicts lies in the ownership structure and the function of board of directors. In recent times, every organization whether it is public or private, big or small, profitable or non-profitable is looking forward to satisfy customers, investors, creditors, suppliers, regulators and the public at large. They are trying to operate in a way that makes all those users or stakeholders appreciate them. One way for these organizations to improve their performance is by showing their responsibility towards the environment. There is increasing pressure on companies to be responsible to the society which has influenced them to operate in an environmentally responsible manner. As various stakeholders demand greater disclosure of some environmental impacts and performance, a large number of companies all over the world started reporting on these issues. In many countries, disclosure of some environmental information has also been made mandatory. Inconclusively, Oba and Fadio (2012) stressed that the implication is that adequate efforts have not been channelled to strike equipoise between development objectives and the need to maintain desirable environmental quality. Presently, there is a growing concern of the society as well as business organizations on environmental issues and the importance of disseminating environmental information. In this regard, environmental reporting has been utilized as the vehicle for expressing the extent of commitment of organizations to the environment and their stakeholders at large. Environmental reporting and awareness can be part of critical long strategies focused on providing behavioural change to support sustainable environmental management. Environmental awareness is a precondition for pro-environmental behaviour and sustainable environment which translates to sustainable development.
In response to the above views, the research is conducted by the researcher bearing in mind the need to capture corporate social accounting information disclosure among firms in Nigeria.
In corporate circle, the absence of social accounting disclosure has given birth to critical challenges which include the following:
1) Greater level of societal agitation owing to corporate neglect of the basic needs of its host communities.
2) Absence of organized reportage of company’s social activities.
3) Absence of regulatory framework for the disclosure of social practice of corporations in the country.
In response to the above challenges, Owolabi (2011) posited that the companies have capitalized on work laws and regulatory watch agencies in the country, who fail to regulate the activities of such multinationals in our corporate spheres, to short change the populace. Thriving on the ethnic disputes, resource control tussle between host countries and the Federal Government, the multinationals and other corporate bodies get away with their abuse of the environment through gas flaring, oil spillages and radiation poisoning from indiscriminate erection of telecommunication mast in the Niger Delta region, has led to a great loss of lives and property that could have been avoided if the multinational companies had engaged in business practices that were more socially accepted and people-oriented. The exponent further traced the origin and the dynamics of the Nigerian civil war in 1967 to 1970 to socio-political factors in the petroleum industry.