Mandatory CSR expenditure regulation and credit ratings: Evidence from India

Neetu Yadav and Satish Kumar

Finance Research Letters, 2025, vol. 75, issue C

Abstract: This study investigates the impact of mandatory Corporate Social Responsibility (CSR) expenditure on credit ratings for 2759 firm-year observations from 2015 to 2023 in the Indian context. Our findings indicate that compliance with mandatory CSR spending significantly enhances credit ratings, particularly for firms with a history of voluntary CSR engagement. This suggests that rating agencies positively perceive consistent CSR activities, viewing them as indicators of enhanced transparency and reduced default risk, thus improving creditworthiness under the new regulatory environment. Our findings are validated using a Difference-in-Differences framework and an instrumental variable approach to address endogeneity concerns.

Keywords: Credit rating; Compliance; Mandatory CSR regulation; CSR expenditure (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612325000765
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:75:y:2025:i:c:s1544612325000765

DOI: 10.1016/j.frl.2025.106811

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().