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Mandatory Corporate Social Responsibility: The Indian experience

Abhishek Mukherjee, Ron Bird () and Geeta Duppati

Journal of Contemporary Accounting and Economics, 2018, vol. 14, issue 3, 254-265

Abstract: The question we raise is what to do when companies fail to keep pace with societal expectations with respect to their corporate social responsibility (CSR). The response of the Indian government was to make it mandatory for large corporations to spend funds on CSR activities. In this paper, we investigate the success of this legislation both for the companies and the intended beneficiaries. We find that the impact of the legislation has fallen short of expectations both in terms of the volume of CSR expenditure generated and the activities to which it has been directed. In particular, we find that the legislation has had a negative corporate profitability which can impact on the willingness of companies to spend in this area. We conclude that greater care must be taken when implementing mandatory CSR if it is to be effective.

Keywords: Corporate Social Responsibility (CSR); Mandatory; Indian legislation; Corporate response; Impact on profitability (search for similar items in EconPapers)
JEL-codes: G38 M14 (search for similar items in EconPapers)
Date: 2018
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Journal of Contemporary Accounting and Economics is currently edited by Agnes C.S. Cheng, P. Clarkson, F.A. Gul, Zoltan Matolcsy, Dan Simunic and Ben Srinidhi

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