Who benefits from mandatory CSR? Evidence from the Indian Companies Act 2013

Jitendra Aswani, N.K. Chidambaran and Iftekhar Hasan

Emerging Markets Review, 2021, vol. 46, issue C

Abstract: We examine the value impact of mandatory Corporate Social Responsibility (CSR) spending required by the Indian Companies Act of 2013 for large and profitable Indian firms. We find that the external mandate is value decreasing, even after controlling for prior voluntary CSR activity by firms affected by the mandate. We also find that there is systematic crosssectional variation across firms. Firms that are profitable and firms in the Fast Moving Consumer Goods sector that voluntarily engaged in CSR, benefit from CSR. Industrial firms and firms with high capital expenditures are negatively impacted by the mandate. We conclude that a one-size-fits-all approach to CSR is sub-optimal and value decreasing.

Keywords: Corporate social responsibility; CAR; Cross-sectional analysis; Diff-in-diff; Indian Companies Act 2013 (search for similar items in EconPapers)
JEL-codes: G30 G38 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:46:y:2021:i:c:s1566014120300947

DOI: 10.1016/j.ememar.2020.100753

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