COMMUNITY DEVELOPMENT COST AND FINANCIAL PERFORMANCE OF OIL AND GAS FIRMS IN NIGERIA

Abstract

This study examined community development and financial performance of oil and gas firms in Nigeria. Specifically, the study analyzed the effect of community development cost on return on asset of selected oil and gas firms. Six (6) oil and gas firms were sampled for the study and data were collated from published annual reports of these firms over the period of 10 years, spanning between 2010 and 2019. Data were analyzed using panel based estimation techniques and evaluations were done for the most consistent and efficient result based on restricted F-test and Hausman test. Result showed that a unit increase in community development cost by 1 billion naira led to insignificant increase in return on asset by 0.7%. By implication this result showed that increase in the level of community development cost of oil and gas firms in Nigeria significantly influenced the performance of oil and gas firms as measured in terms of return on asset. This study concluded first that engagement in community development in Nigeria by oil and gas firms has the potential to culminate into improved corporate performance; however, such potential is yet to be fully harnessed by most of the oil and gas firms in Nigeria. Hence oil and gas firms in the country, should be more objective in their engagement in community development in the country, so as to further boost their performance potential.