Published Online:April 2026
Product Name:The IUP Journal of Corporate Governance
Product Type:Article
Product Code:IJCG020426
DOI:10.71329/IUPJCG/2026.25.2.28-40
Author Name:Sivanandhini S and Thineshkumar M
Availability:YES
Subject/Domain:Management
Download Format:PDF
Pages:28-40
The study investigates the relationship between environmental, social, and governance (ESG) performance, corporate social responsibility (CSR) expenditures, and the financial performance of India’s Information technology (IT) sector between 2016 and 2024. Using a balanced panel dataset of five leading Indian IT firms, which yields 45 firmyear observations, the study applies a fixed-effects regression model to account for unobserved firm-specific heterogeneity. Financial performance is measured through three indicators: return on assets (ROA), return on equity (ROE), and Tobin’s Q. The explanatory variables include overall ESG score, firm size, leverage, and CSR spending expressed as a percentage of net profit. The analysis produces three key findings. The first negative that leverage has a strong detrimental impact on ROA, corroborates the view that increased debt reduces profitability. Second, CSR spending has a significant inverse relationship with ROE, which indicates that obligatory social investments will decrease short-term shareholder return. Third, ESG performance has a positive but statistically insignificant relationship with ROE and Tobin’s Q, proving that the financial benefits of environmental sustainability initiatives do not occur immediately. Overall, the study suggests that ESG engagement supports the long-term sustainability of IT firms, whereas CSR initiatives involve short-term financial tradeoffs.
Environmental, social and governance (ESG) and corporate social responsibility (CSR) are concepts that have risen to the heart of both strategy discussions in business schools over the last decade and practical application by firms themselves.