Does CSR disclosure influence financial performance of firms? Evidence from an emerging economy

Aditi Singh and Madhumita Chakraborty

Sustainability Accounting, Management and Policy Journal, 2021, vol. 12, issue 4, 788-810

Abstract: Purpose - This study aims to empirically examine the relationship between corporate social responsibility disclosure (CSRD) and financial performance (FP) in Indian firms. Design/methodology/approach - Data for CSRD is collected by conducting content analysis of CSRD in annual reports of the sampled firms. A multidimensional measure of CSRD is constructed based on the stakeholder theory, consisting of six stakeholder groups – employees, customers, investors, community, environment and others. The aggregate CSRD measure is created by combining disclosure of the six CSR dimensions. Multiple regression analysis is used to examine the CSRD–FP linkage, controlling for the confounding effects of size, risk, age, industry, ownership and period. Findings - The results of this study indicate that the aggregate CSRD measures, both for quality and quantity, have a positive association with the accounting measures of firms’ FP. However, the market measure of FP is observed to have a statistically insignificant association with aggregate quality and quantity of CSRD of Indian firms. Practical implications - The results reveal that adopting transparent and extensive CSRD is relevant for the profitability of firms, and that government interventions are required to promote CSR programs, with a specific focus on the CSR dimensions that provide no apparent financial gains. Social implications - This study recommends the adoption and reporting of CSR practices by Indian firms for their stakeholders. Originality/value - This study contributes to the scarce literature on the CSRD–FP linkage in the context of emerging economies by using a more inclusive data set, creating a reliable measure of CSRD applicable to a large universe of firms and including relevant control variables that affect the CSRD–FP relationship.

Keywords: CSR disclosure; Content analysis; Financial performance; Emerging economy (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

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:eme:sampjp:sampj-02-2018-0042

DOI: 10.1108/SAMPJ-02-2018-0042

Access Statistics for this article

Sustainability Accounting, Management and Policy Journal is currently edited by Prof Carol Adams

More articles in Sustainability Accounting, Management and Policy Journal from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().