Mandatory Corporate Responsibility Regulation, Geopolitical Risk, and Firm Performance: Evidence From India

Niharika Kasaudhan and Ranjan DasGupta

Scottish Journal of Political Economy, 2025, vol. 72, issue 5

Abstract: This study investigates whether a mandated requirement to spend on social welfare activities amplifies the impact of Geopolitical Risk (GPR) on firm performance. To explore this question, we exploit the insertion of Section 135 in the Indian Companies Act, 2013, as an exogenous policy shock to set up a quasi‐natural experiment. A Difference‐in‐Differences (DiD) analysis, based on the enactment of Section 135 in 2015, reveals that mandatory Corporate Social Responsibility (CSR) regulation amplifies the negative impact of GPR on firm performance. Our findings suggest that regulatory intervention mandating CSR expenditure increases the sensitivity of firm performance to GPR.

Date: 2025
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