Corporate Social and Environmental Reporting (CSER) and Financial Performance: The Mediating Role of Competitive Advantage

The paper examined the mediating effect of competitive advantage on the relationship between CSER and financial performance in Nigeria. The study adopted the ex-post causal research design because it seeks to examine the causality between CSER and financial performance within a mediation context. A sample size of 100 companies from all sectors listed on the Nigerian Stock exchange (NSE) between 2007 and 2016 was used. Panel regression analysis was used in the estimation of the data. The mediation Model was tested based on Baron and Kenny’s (1986) conditions for mediation. Results from the study revealed that competitive advantage mediates in the relationship between CSER and financial performance. This result confirms the Resource Based Theory (RBT) that engaging in social and environmental reporting activities can enhance a company’s competitive advantage which will ultimately improve the financial performance in Nigeria. The study recommends that corporations in developing and emerging markets should begin to think differently about CSER as a proactive and strategic tool towards enhancing competitive advantage and consequently financial performance rather than just in response to the demand for CSER globally.