Corporate social responsibility and cash holdings in India: Evidence from a natural experiment

Nemiraja Jadiyappa, Anto Joseph, Garima Sisodia, Raveesh Krishnankutty and Santosh Shrivatsava

Finance Research Letters, 2021, vol. 39, issue C

Abstract: The relationship between CSR and cash holdings is not conclusive from prior studies due to the endogeneity issue. In this study, we use a natural experiment setting, i.e., the implementation of mandatory CSR spending regulation in India in 2015, to test the relationship between CSR and cash holdings. Our results show a positive relationship between CSR and the value of cash holdings. As a result of such positive valuation, we observe that the firms which are required to spend on CSR activities under the Act, increased their cash level in the post-regulation period.

Keywords: CSR; Cash holdings; Natural experiment; India; CSR regulations (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:39:y:2021:i:c:s1544612319312541

DOI: 10.1016/j.frl.2020.101581

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