Linking Corporate Social Responsibility Reporting with Corporate Performance: Evidence from Selected Companies in India

Abstract

Corporate social responsibility aims at making the process of maximizing the wealth of shareholders more effectively and fairly by taking care of the needs of the society as well. This concept has gained importance in the recent past as business could realize the benefit of CSR in the form of customer loyalty, community support and reduction in environment hazards. Companies need to identify its key stakeholders so that it can manage social and environment responsibility appropriately in response to these stakeholder’s expectations. This paper aims to compare the CSR performances of sample industries in India and develops a relationship between CSR and corporate financial performance. A sample of 120 companies has been taken from the list of ET 500, 2012 to compare the corporate social performance based on self identified parameters of social performance and further relate it with financial performance based on six financial ratios. The result of the Kruskal wallis test reveals that there is no significant difference in the Indian companies in following CSR practices and reporting them in their annual reports. Moreover, as per the correlation analysis no significant relationship was found in the corporate social and financial performance. This implies that Indian companies need to adopt a comprehensive strategy to follow CSR policy implications and take financial benefit of social performance in the long run.