Impact of Companies Act 2013 on the CSR expenditure

Abstract

Moving from a voluntary to an obligatory regime, the enactment of Section 135 of the Companies Act 2013 is an ambitious attempt made that mandates some specific companies to disclose their CSR spending. This paper attempts to study the pattern of CSR spending after the enactment of the new law. Major observations were that 2014, being the initial year of implementation, did not observe much change in the CSR policies of the companies, however, in 2015, considerable changes were observed as companies started adapting to the new policies. The study also focused on the relationship, if any existed, between the corporate governance parameters and corporate social responsibility activities that a company undertakes. Multivariate regression was used for the purpose of analysis. Results depicted that financial variables significantly and positively impacted the CSR expenditure of the company in both the years of study, 2014 and 2015. However, in the year 2015, it was observed that one of the CG variable, i.e., board size significantly impacted the amount of company's CSR expenditure other than the financial variables PAT and size. Thus, it was concluded that corporate governance and financial variables together impacted the CSR expenditure that the company intended to spend.