Governance of corporate social responsibility and return on assets in the South African mining firms

Abstract

Governance of corporate social responsibility (CSR) remains a permanent subject in the sustainability development debates despite its long history. This article examines issues of governance by establishing the relationship between CSR and return on assets (ROA) of Johannesburg Security Exchange (JSE) listed mining firms. The purpose of focusing on mining firms is necessitated by the need to address socioeconomic ills which are phenomenal within the South Africa’s mining communities. Hence, the objective of this article is to investigate the interactions in the CSR, based on employees and black suppliers. The secondary data on CSR and ROA for the years 2010–2014 were collected from the integrated reports of purposively sampled 10 mining firms listed on JSE (SRI) Index. The case study research strategy was adopted from which data was collected and gathered using content analysis. The CSR aggregates such as Broad Based Black Economic Empowerment (BBBEE) procurement and skill and training expenditure are used as independent variables while ROA is used as a dependent variable. The multiple regression statistics are used to test the relationship, which is the manifestation of the underlying governance. The findings reveal that CSR has a negative impact on ROA. However, after the incorporation of the number of employees as a control variable, the results show that there is a positive relationship between CSR and ROA. In this way, the study confirms that tenets of good corporate governance are satisfied in the relationship of CSR and ROA in the selected mining firms, notwithstanding the continued poverty among mining communities.