Published Online:July 2024
Product Name:The IUP Journal of Accounting Research & Audit Practices
Product Type:Article
Product Code:
Author Name:Navin Chettri and K C Kabra
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:16
The Indian Companies Act, 2013, made corporate social responsibility (CSR) expenditure mandatory for companies meeting threshold criteria, and outlined certain activities that qualify for the same. This paper investigates the relationship between CSR expenditure and firm value by considering the top 100 nonfinancial companies listed on National Stock Exchange (NSE) based on market capitalization as on March 31, 2021. It examines the relationship between the two variables directly and with moderators like firm size, age, and advertisement intensity. Moderators help better understand the relationship between the two variables. The Random Effect Model of panel regression has been employed to analyze the dataset, which covers 11 years (2010-11 to 2020-21) with 1,100 firm-year observations. The findings suggest that CSR expenditure has a favorable impact on firm value. The relationship becomes more robust when it comes to larger, older and more popular firms. The results add to the theoretical and empirical literature on CSR and firm value by reinforcing the stakeholder theory and giving policymakers and managers an insight into CSR management
As a concept, corporate social responsibility (CSR) has a long, diverse and robust history. It has an upbeat and optimistic future (Carroll, 2021) and witnessed a significant change in nature and scope over the past few decades. CSR is the benchmark and central piece of the socially responsible business movement (Carroll, 2016), which encapsulates CSR as a strategic and instrumental proposition in a firm’s operationalization. One can notice that CSR as an idea and concept has transformed from being irrelevant and doubtful to one of the most researched topics (McWilliams et al., 2006). CSR generally involves companies voluntarily addressing social, environmental and ethical issues beyond their legal requirements. However, CSR in India is no longer a voluntary and charity-based initiative.