| Pub. Date | : Oct, 2018 |
|---|---|
| Product Name | : The IUP Journal of Corporate Governance |
| Product Type | : Article |
| Product Code | : IJCG11810 |
| Author Name | : Poonam Rani and Veerpaul Kaur Mann |
| Availability | : YES |
| Subject/Domain | : Management |
| Download Format | : PDF Format |
| No. of Pages | : 19 |
In the present era, corporations are accountable for their actions towards the shareholder and the society at large because corporations get their resources from the society. This study examines the impact of ethical and philanthropic components of CSR on the financial performance of BSE-500 companies. Both the components comprise self-motivated humanitarian initiatives of societal wellbeing. The study majorly analyzed the impact of charity, donations, staff, and societal welfare expenses on the financial performance of BSE-500 companies. For the purpose of generalization, the study used the Panel Data Regression model. It is observed that instead of indirect attention (donations) toward social responsibilities, direct contribution (social and community development expenses) by the sampled firms brought a significant improvement in their financial performance (ROE, ROCE). The study revealed that the ethical and philanthropic aspect of CSR contributes towards better financial performance (ROE, ROCE) of corporations without influencing the profit-making capacity of their assets (Return on assets).
Corporations are economic institutions, having profit-making motive, but in the present day, they have to function for the wellbeing of the society as well. Authorities of the company serve as agents of the workers, the public and the stakeholders. Corporations are accountable for their actions towards society and the stakeholders. Nowadays, a wide range of economic and civic responsibilities are imbibed in the day-to-day functions of corporate entities. The corporate perception of being a good corporate citizen has introduced more criticalities in their significant day-to-day functions. No doubt monetary payments and non-monetary efforts towards wellbeing of the stakeholders help in image building, but on the other hand these monetary payments reduce the profits as well as liquidity of a corporate. Consequently, financial performance of a corporate entity is likely to be affected by such monetary payments. These payments are basically the costs to meet the Corporate Social Responsibility (CSR). CSR, corporate conscience, corporate citizenship, social performance, or sustainable responsible business/responsible business are synonyms of corporate social responsibility.