Bombay Stock Exchange Research Articles

A Financial Performance Analysis of Indian Oil Exploration & Drilling Sector

Purpose: The study of financial performance analysis in the Indian oil and drilling sector serves a critical purpose in providing stakeholders with insights into the economic health, operational efficiency, and strategic positioning of companies within this industry. By analysing key financial metrics such as profitability, liquidity and valuation ratios, stakeholders including investors, policymakers, and industry participants can assess the sector's overall stability, growth potential, and risk exposure. Moreover, such analysis facilitates informed decision-making processes related to investment allocation, risk management strategies, policy formulation, and strategic planning. Understanding the financial performance of companies within the Indian oil and drilling sector is imperative for stakeholders to navigate the complexities of this dynamic industry, capitalize on opportunities, and mitigate potential challenges effectively. Oil Exploration and Drilling companies listed on the Bombay Stock Exchange were selected for the study. Design/Methodology/Approach: Five BSE listed Oil Exploration and Drilling companies are considered for the present research work and analysed by using profitability, liquidity and valuation ratios. Findings/Result: Selected Oil Exploration & Drilling sector companies listed on the BSE were the subjects of this study's analysis of their Profitability, Liquidity & Valuation ratios. The websites of Money Control and the BSE provided the majority of the time series data used in the study on three different ratios, Profitability, Liquidity & Valuation. Five years, from 2019 to 2020 to 2022–2023 are included in the analysis of Profitability, Liquidity & Valuation. It is recommended that investors can invest their money into ONGC, Reliance, and Oil India, Petronet LNG LTD. in order to maximise their investments. Originality/Value: This study employs the financial analysis method to analyze profitability, liquidity and valuation of the selected Oil Exploration & Drilling Sector. Paper Type: Empirical research

Empirical Evidence on the Validity of the Conditional Higher Moment Capm in the Bombay Stock Exchange

Various researchers criticized the assumption of a normal distribution of returns in the traditional Capital Asset Pricing Model (CAPM), leading to the recognition of the non-normal distribution of returns and the mean and variance were insufficient to characterize the distribution of returns completely which led the researchers to look for higher order moments. The present study investigated empirical validity of the conditional higher order moment Capital Asset Pricing Model (CAPM) in the context of the Indian stock market, specifically the Bombay Stock Exchange utilizing the data from sectoral indices for the period from April 2011 to March 2021. To test the four moment CAPM empirically, the specification derived from Bollerslev et al. (1988) has been used in the study. The study's findings reveals that the higher moment i.e. conditional coskewness and cokurtosis hold significant pricing implications and do have an impact on returns in the Indian stock market. The explanatory power of the model showed an increase as compared to the unconditional CAPM as the R-square value obtained was greater than the latter model. The results of the study were found to be mixed and inconclusive. Hence, the conditional higher moment CAPM cannot be validated in the Indian context.

Empirical Evidence on the Validity of the Unconditional Higher Moment CAPM in the Bombay Stock Exchange

The traditional Capital Asset Pricing Model (CAPM) assumed a normal distribution of returns, which was criticized by various researchers who recognized the non-normal distribution of returns in the Sharpe-Lintner CAPM. The introduction of unconditional higher moments, namely co-skewness and co-kurtosis, as additional measures of systematic risk may enhance the model's explanatory power, especially when the distribution function of stock returns is asymmetric. The present study empirically investigates the applicability of unconditional higher order moment CAPM and the impact of higher moments in the Indian stock market i.e. Bombay Stock Exchange using the data of sectoral indices for the period from April 2011 to March 2021. To test the four moment CAPM empirically, the specification given by Fang and Lai has been used in the study. The findings of the present study revealed that the higher moments (coskewness and cokurtosis) are significantly priced and have impact on the returns in the Indian stock market. The market risk premium for covariance was found to be insignificant. Further the hypothesis related to intercept term was accepted and market risk premiums were rejected. The results showed an increase in the explanatory power of the model as compared to the unconditional CAPM as the R-square value of the model was obtained better than the latter model. The mixed and inconclusive findings contradicted the model in the Indian context. The alternate models like the Fama-French three factor and five factor model should be exploited in the Indian context as those models have been rarely used in the Indian context.

The impact of innovation orientation on strategic R&D amidst macroeconomic shocks – an event study approach

PurposeThis research investigates the impact of strategic research and development (R&D) (one led by a firm’s innovation orientation) on stock market performance during the economic disruption caused by the 2016 demonetization of high-value currency notes in India. It shows how firms’ strategic focus on innovation and integrated R&D initiatives can help mitigate shareholders’ losses and protect market value during negative macroeconomic shocks.Design/methodology/approachWe analyzed financial and administrative data from firms listed in the Bombay Stock Exchange (BSE) 500 index and used the Fama French market model with appropriate instruments accounting for possible endogeneity to identify the impact. To ensure the reliability of our findings, we conducted robustness checks with alternate event windows, estimation methods, and variable measurements.FindingsStrategic R&D plays a crucial role in building resilience against macroeconomic shocks. It effectively mitigated shareholders’ losses in the immediate aftermath of the shock, with an elasticity of abnormal returns of 7.65% on day zero, 13.1% during the first five days and 10.5% after the first fortnight. We also find that firms that are business-to-business (B2B), as well as those that are older and less leveraged, are better able to combat such a shock.Research limitations/implicationsThe study looked at one shock, namely demonetization. Future research is needed to demonstrate the generalizability of results during other macroeconomic shocks, like the COVID-19 pandemic. The study focuses on relatively near-term impacts, leaving the long-term value-creation effects of strategic R&D unexplored.Practical implicationsInnovation orientation acts as a structural enabler, allowing firms to make strategic R&D investments that mitigate losses during macroeconomic shocks. It explains that managers should avoid myopically managing R&D investments and align them with the firm’s innovation focus to enhance value creation.Social implicationsWhile the currency demonetization was widely considered to be detrimental for firms as an unannounced negative monetary shock, our research shows that firms with high levels of strategic R&D were successfully able to counteract such a shock.Originality/valueThis is the first study to examine the short-term loss mitigation impact of firms’ focus on innovation and strategic R&D. It emphasizes the role of innovation-focused strategies during economic crises.

Assessing the effect of core and expanded ESG on corporate financial performance: COVID-19’s moderating role

PurposeThis study aims to investigate the influence of disclosing environmental, social and governance (ESG) factors on financial performance, taking into account the moderating effect of the COVID-19 pandemic.Design/methodology/approachA sample of the top 100 non-financial firms listed on the Bombay Stock Exchange, for the years 2019–2022, has been considered. Suitable panel regression models have been used to assess the impact of non-financial disclosure on accounting and market measures of firm performance. In addition, a panel data moderating effect model is used to assess the moderating impact.FindingsThe outcomes of the study partially favour the value-creation role of ESG disclosure. Specifically, the disclosure of already established ESG metrics, particularly social and governance aspects, positively impacts the market performance while environmental transparency negatively impacts the accounting performance. Of the three ESG components, only extended governance disclosure adds to market value. Results of the moderation effect reveal a significant impact of the pandemic on the ESG disclosure–financial performance relation. However, a more pronounced effect before the pandemic is observed. The results are robust to endogeneity.Originality/valueThis study sheds light on the financial consequences of ESG disclosure within the context of an emerging nation. This is done by using a novel holistic ESG reporting framework to obtain more accurate results. Furthermore, the study distinguishes itself by examining the long-term moderating influence of the unexpected COVID-19 crisis on the ESG disclosure–financial performance relation.

Valuation Effects of Magnitude and Frequency of Share Repurchases: Indian Evidence

This study examines the valuation effects of the magnitude and frequency of share repurchases for 181 Bombay Stock Exchange–listed stocks from 2000 to 2021. We investigate the valuation effect of share repurchases by calculating the sample companies’ average abnormal returns (AARs) and average cumulative abnormal returns (CARs) using the market model of event-study methodology. The findings show that the magnitude of share repurchases impacts the stock prices of the sample companies, regardless of the size of the repurchases concerning the total number of ordinary shares outstanding. Furthermore, when compared to single-time repurchasing companies, frequent repurchasing companies experience abnormal returns. This study contributes to the scant literature on the frequency and magnitude of share repurchases across the world.

The analysis of performance due to impact of bullwhip effect in Covid: select Indian sector perspective

Purpose The purpose of the study is to analyze and measure the impact of disruption in demand which causes the bullwhip effect. The bullwhip effect impacts the performance of firm. Just like everything else, covid has had an impact on the disruption of supply chain too leading to the need of measuring the bullwhip effect of select Indian sectors. The comparison on bullwhip effect is drawn in pre- and during covid era in major sectors. The study helps to understand, analyze and measure the impact of covid and its challenges to supply chain. Design/methodology/approach The empirical study is carried out on five major select Indian sectors which have the largest market capitalization in Indian economy, namely, FMCG (fast-moving consumer goods), automobile, utility, consumer durable and IT (information technology). The disruption in the supply chain is measured in terms of bullwhip effect. The novel metric ratio of bullwhip effect is computed which is based on demand–supply mismatch and analyzed based on 10 years of observations. The data is analyzed twice, first from 2011 to 2019 (pre-covid era) and second from 2019 to 2021 (during covid era). Each time, Bombay Stock Exchange (BSE) sectoral indices are used to compute the bullwhip ratio, and empirical data is collected using Prowess. The firms listed in BSE represent most of the sector. Such panel data helps us to analyze inter- and intraindustry bullwhip effect. The changes in the bullwhip effect for various BSE listed firms are analyzed pre- and during covid era. These changes are specifically studied at the manufacturer end of the supply chain. Later regression analysis is performed to study the changes required in production based on the demand. The various strategies that cause or mitigate the impact of covid in intraindustry can be derived from the study. The disruption in production is analyzed based on the disruption in demand and profit before interest and tax (PBIT). Findings In pre-covid era, the percentage of demand disruption was low in select sectors but not exactly zero. Covid caused the disruptions in supply chain across the globe which resulted in bullwhip effect in Indian sectors too. Yet some of the sectors were able to cope better with the situation as compared to others. In the present study, same is analyzed statistically, and results are derived for practical significance. Research limitations/implications The empirical data is having the observations of past 10 years to analyze the pattern of demand disruption in the firms and hence the sectors. The impact of covid is studied on performance, which is analyzed in terms of PBIT. The impact of other factors (political, social, marketing policies, etc.) that may cause disruption in the supply chain of a firm is not considered in the study. Originality/value Study is unique, as it measures disruption and provides a peerless way to study the inter- and intrasectors. To analyze the impact of bullwhip effect on sector performance, it is very much required to first measure the bullwhip; this measure of bullwhip as a ratio of the slopes of demand and supply is a novel approach. The study emphasizes that the impact of covid is not the same among the firms, and hence among the sectors. Also, it is found that the impact of such adversities can be mitigated, and performance of firm can remain intact in turbulent times too.

Indian Stock Markets’ Reaction to the Nationwide Lockdown due to COVID-19: Evidence from Event Study Analysis

Indian Stock Markets’ Reaction to the Nationwide Lockdown due to COVID-19: Evidence from Event Study Analysis

Stock Market Integration among Trading Partners

This study makes an attempt to analyse the dynamics of integrating relationship shared by Indian and Chinese stock market for the period ranging from January 01, 2002 to June 30, 2021. Prominent stock indices namely BSE SENSEX index of Bombay Stock Exchange Limited, India and Shanghai Stock Exchange Composite Index (SCI) of Shanghai Stock Exchange Limited, China were considered. Johansen Cointegration test was used to analyse the long term integration shared by the stock markets. Granger causality test was employed to know the causal relation shared by the stock markets. Presence of long term integration and unidirectional causal relation between the stock markets was found. It may be inferred that investment diversification among these markets may not provide fruitful returns to the investors in long run. Presence of causality from BSESENSEX to SCI and absence of causality from SCI to BSESENSEX suggests significant flow of information from Indian stock market to the Chinese stock market but not vice-versa. Findings of the study also suggests that extent of connectedness shared by the Indian and Chinese market does not vary too much with time. The findings revealed that although the financial markets of trading partners share significant integration but the intensity of trade does not impact the extent of financial linkages shared by the nations. These implications may provide significant insights to the investors, fund’s managers, policymakers and other market players.

A Sectoral Analysis of BSE-Listed Indian Pharma Companies

Purpose: Investors, including domestic and international firms, venture capitalists, and financial institutions, rely on research to evaluate investment opportunities in the Indian pharmaceutical sector. Research helps assess factors such as market potential, company performance, R&D capabilities, regulatory environment, and risk-return profiles. Research plays a crucial role in guiding research and development (R&D) investments and priorities within the Indian pharmaceutical industry. By identifying unmet medical needs, emerging therapeutic areas, and technological advancements, research helps companies allocate resources effectively and focus on areas with the highest potential for impact and return on investment. The current research includes analysing financial statements, such as income statements and cash flow statements, to assess the profitability and earnings stability of pharmaceutical firms, and also investigate factors influencing EPS growth, such as revenue trends, cost structures, research and development (R&D) investments, regulatory environments, and market dynamics. Additionally, the study of DPS involves evaluating dividend payout ratios, dividend yield, dividend stability, and factors driving dividend decisions, including company profitability, cash flow generation, capital requirements, and shareholder preferences. Understanding the relationship between EPS and DPS in the Indian pharmaceutical sector provides valuable insights for investors, analysts, and policymakers in assessing the financial health, investment attractiveness, and shareholder value creation of pharmaceutical companies. Pharmaceutical companies listed on the Bombay Stock Exchange were selected for the study. Speculations were tested using ANOVA and T-TEST. The audit revealed that investors can invest in Dr. Reddys Laboratories, Abbott India, and Themis Medicare for their EPS to be maximum and Dr. Reddys Laboratories, Abbott India, and Novartis India for their DPS to be maximum. Methodology: Fifteen BSE-listed pharmaceutical companies are considered for the present research work and analysed by using EPS and DPS. Result: Selected Large, medium, and small Indian pharmaceutical companies listed on the BSE were the subjects of this study's analysis of their EPS and DPS. The websites of Money Control and the BSE provided the majority of the time series data used in the study on two different variables, EPS and DPS. Five years, from 2019 to 2020 to 2022–2023 are included in the analysis of the EPS and DPS. The BSE-listed Indian pharmaceutical businesses' EPS and DPS were examined in this study. Descriptive statistics (mean, standard error, standard deviation, skewness, and kurtosis) were computed for the determined EPS and DPS. An ANOVA test is run on the EPS and DPS data to find the differences between the chosen pharmaceutical businesses listed on the BSE. It is recommended that investors put their money into Abbott India, Themis Medicare, and Dr. Reddys Laboratories in order to maximise their EPS, and Novartis India, Abbott India, and Dr. Reddys Laboratories in order to maximise their DPS. Originality/Value: The BSE-listed Indian pharmaceutical businesses' EPS and DPS were examined in this study. Descriptive statistics (mean, standard error, standard deviation, skewness, and kurtosis) were computed for the determined EPS and DPS. Based on the study, the right companies for the investors are recommended. Paper Type: Exploratory research.

Working capital management strategies and financial performance: A cause-and-effect analysis

This study attempts to validate whether the working capital management strategies can be considered as the causes of good or bad financial performance of an organization, particularly in Indian cement industry. Whether the decisions of finance managers of Indian cement companies concerning the components of working capital such as account receivables, inventory, accounts paybles, cash holding etc. affect the firm’s performance individually and in total, a sample of 31 Indian cement companies listed on the Bombay Stock Exchange are being selected and their financial statements are analyzed for a period of 11-years (2010-2020). The findings of Pearson’s correlation coefficient and random effect regression model analysis show that there exists a negative relationship between financial performance measured in terms of return on assets (ROA) and inventory turnover period (ITP) as well as accounts payable period (APP). In contrast, a firm’s performance is not significantly affected by the accounts receivable period (ARP) and cash conversion cycle (CCC). Similarly, it has been observed that liquidity ratios such as current ratio (CR) and quick ratio (QR) have a significant positive association with ROA. Moreover, the size of the firms and leverage are inversely related to ROA but the age of the firms is not significantly affecting their financial performances.

Efficient solutions for vector optimization problem on an extended interval vector space and its application to portfolio optimization

In this paper, a generalized interval vector space is investigated and defined as an ordered relation in the form of a bijective linear transformation of its onto a real vector space. The ordered relation is utilized to formulate an interval optimization problem in the same manner as a classical multi-objective programming problem. A methodology that addresses the existence of efficient solutions for the multi-objective interval optimization problem has also been discussed. Various numerical examples are described to illustrate and substantiate all developed concepts. Furthermore, the multi-objective portfolio rebalancing problem for a time horizon is designed based on the developed interval vector optimization. An algorithm using exhaustive solution technology has been proposed to achieve an efficient investment strategy. Finally, its applicability and efficacy are analyzed using Bombay Stock Exchange India data sets.

The effects of promoter share pledging on stock price crash risk and financial performance: empirical evidence from India

PurposeDespite the widespread prevalence of share pledging by Indian promoters, this area remains out of the researchers’ purview. This study aims to bridge this research gap by delineating the impact of promoter share pledging on future stock price crash risk and financial performance in India.Design/methodology/approachA sample of 257 companies listed on the Standard and Poor’s Bombay Stock Exchange 500 (S&P BSE 500) Index has been analysed using panel (fixed-effects) data regression methodology over 2011–2020. Further, alternative proxies for crash risk and financial performance are adopted to ensure that the study’s initial findings are robust. Finally, the instrumental variable with the two-stage least squares (IV-2SLS) method has also been employed to alleviate endogeneity concerns.FindingsThe results suggest a significantly positive relationship between promoter share pledging and future stock price crash risk in India. Conversely, this association is significantly negative for future financial performance. Moreover, the results hold, even after including alternative proxies of stock price crash risk and financial performance and addressing endogeneity concerns.Originality/valueOwing to the sizeable equity shareholdings of the promoters, share pledging has remained a lucrative source of finance in India. Despite the popularity, the findings of this study question the relevance of share pledging by Indian promoters considering its impact on aggravating future stock price crash risk and deteriorating future financial performance.

Voluntary Intellectual Capital Disclosure and Information Asymmetry: Study of Indian Firms

This article develops a disclosure index to examine the extent and quality of intellectual capital disclosure in Indian firms. Furthermore, it assesses the gap between stakeholder expectations and industry disclosure procedures by conducting five years database analysis. To analyze the extent and quality of intellectual capital disclosure, a content analysis technique was applied to a sample of 30 non-financial firms listed on the Bombay Stock Exchange for five years, 2018–2022. A disclosure index of 42 items was constructed based on previous studies under three intellectual capital categories: Structural Capital, Relational Capital, and Human Capital. It was found that Indian companies had a low level of intellectual capital disclosure, although it increased by 28% from 2018 to 2022. Also, there was an upward movement in the disclosure of all intellectual capital components. Structural capital is disclosed by the number of organizations, whereas human capital is being disclosed the lowest. This study developed a new disclosure index consisting of 42 intellectual capital items based on extant research conferred by experts. In addition, the study considered a Sensex non-financial company for the analysis. Third, this study uses graphs to represent disclosure quality.

Impact of Automobile Companies Stock Returns on Indian Stock Market Indices with Special Reference to Nifty Fifty Index

The Nifty Fifty Index has a free-float market capitalization-weighted index.it represents the weighted average of the top 50 Indian companies listed on the National Stock Exchange ,and it is one of the main stock indices being used in India, besides the BSE Sensex of the Bombay Stock Exchange. The Nifty 50 index represents 62% of the free float market capitalization of the stocks listed in the NSE (NATIONAL STOCK EXCHANGE) as on September 30,2022.sectors ‘s stocks are performing more consistently and provide high return with high risk in (NSE)NATIONAL STOCK EXCHANGE ,these stocks are emerging as most reliable stock in capital market. Nifty Fifty Index also influenced by the variation in Automobile Industry which happened due to market fluctuation .The Automobile Sector has influenced by micro and macro indicators So in this, researcher found a relationship between Nifty Fifty Index and different selected Automobile companies by the application of some statistical tools like as regression to examine the impact of different companies stock return on Nifty fifty Index and correlation to check the relationship between Nifty Fifty and Automobile Sector Companies. And for this study data of 18 years from 1 January 2003 December 2022 has been taken. After the application of test this can be concluded that nifty fifty Index have impact of Automobile companies’ stock return variation on it and Nifty fifty index and Automobile companies are highly positively correlated with each other. At last it can be recommended that one variable can be used for forecasting another variable. So it can be concluded that development of economy and capital market has a relationship with performance of Automobile Industry in stock market and its return providing capacity. This study is going to be helpful for those investors who prefer to invest in Automobile Sector.

CAPITAL STRUCTURE ON PROFITABILITY -A CASE STUDY OF SBI LIFE INSURANCE -AN EMPIRICAL EVIDENCE

A companys capital structure is the sum of all the many forms of outside financing it employs in its first stages, as used in corporate finance. The balance sheet of a firm details its financial position, which includes equity, debt, and preferred stock. Ownership of a companys shares and the right to a portion of its future earnings and cash flows constitute equity capital. Equity may be expressed as ordinary stock, preferred stock, or retained profits, whilst debt can be issued as loans or bonds. An additional component of the capital structure is short-term debt. An examination of eight trading organisations data sets was conducted on the Bombay Stock Exchange (BSE). To analyse and test hypotheses, the acquired data was imported into EViews and the multiple regression analysis approach was used. Capital structure affects a companys financial success, according to the studys results. According to the results, long-term debt and equity both significantly affect financial performance in a favourable way, whereas short-term debt has the opposite effect. This paper explains about Capital structure of SBI Life Insurance on Profitability using Ratios and descriptive statistics. KEYWORDS: Capital Structure, Profitability, Financial performance, SBI Life Insurance. JEL CODES: O16, O17, O18, O19.

Economic Policy Uncertainty and Equity Fund Flows to India: A Bayesian Approach

We compare the impacts of economic policy uncertainty (EPU) and global economic policy uncertainty (GEPU)-related shocks on equity fund flows (EFFs) to India using a Bayesian vector autoregression approach. We find that (a) Indian EPU and GEPU are strongly and negatively related to EFF; (b) EFF are more sensitive to GEPU relative to Indian EPU; (c) evidence of trend-chasing behaviour by fund managers in India; and (d) GEPU is an important factor for forecasting returns on the Bombay Stock Exchange. Taken together, our findings indicate that EPU is important to understanding equity allocation decisions and returns in India. JEL Codes: F21, F39, G11

An Empirical Study on Construction Portfolio with Reference To BSE

It deals with the empirical study of construction portfolios with a focus on the Bombay Stock Exchange (BSE). It outlines a comprehensive research methodology that combines quantitative and qualitative approaches to analyze the performance and risk factors associated with construction portfolios. The quantitative aspect involves the meticulous analysis of financial data from annual reports and stock market records of BSE-listed construction companies, while the qualitative component entails in-depth interviews and surveys with industry experts, policymakers, and investors to gather insights into non- financial aspects influencing construction portfolios. Additionally, the document provides references to studies on optimal portfolio construction using the Sharpe single index model, global equity country allocation, and portfolio performance analysis using various methods. KEYWORD: Bombay Stock Exchange (BSE), Portfolio Optimization, Risk Management, Quantitative Analysis, Qualitative Research, Financial Performance, Market Trends

Mandatory CSR regulations and social disclosure: the mediating role of the CSR committee

PurposeThis study aims to examine the association between mandatory corporate social responsibility (CSR) regulations (CSR mandate) and social disclosures (SOCDS) in India. It also investigates whether CSR committees mediate the relationship between CSR mandate and SOCDS. Furthermore, this paper explores how business group (BG) affiliation moderates CSR committee quality and SOCDS.Design/methodology/approachThis study uses a data set of 5,345 observations from the Bombay stock exchange (BSE)-listed firms over 10 years (2011–2020) to examine the research questions. Baron and Kenny’s (1986) three-step model is estimated to examine the mediating role of CSR committees on the relationship between CSR mandate and SOCDS.FindingsThe study reveals that the CSR mandate positively impacts SOCDS in India due to coercive pressures. CSR committees mediate this relationship, with higher CSR committee quality leading to increased SOCDS. Furthermore, the authors report that SOCDS in India is positively related to CSR committee quality, and this relationship is stronger for BG firms. Finally, the supplementary analysis reveals that promoting CSR committee quality enhances firms’ likelihood of meeting CSR mandatory spending and actual CSR spending in India.Originality/valueThis research contributes to the academic literature by shedding light on the intricate dynamics of CSR mandates, CSR committees and SOCDS in emerging economies. Notably, the authors identify the previously unexplored mediation role of CSR committees in the link between CSR mandates and SOCDS. The creation of a composite index that measures complementary CSR committee attributes allows us to undertake a novel assessment of CSR committee quality. An examination of the moderating influence of BG affiliation documents the importance of CSR committee quality, particularly in governance, for enhancing SOCDS transparency within BG firms.

Does Ownership Influence Corporate Social Responsibility (CSR)? A Study Of Post-Csr Law Implementation In India

Objective: This study examines the influence of different ownership structures on corporate social responsibility spending in a mandatory CSR regime. Method: We use the CSR data under statutory mandate reported by the top 500 publicly listed Indian firms of the first four years after CSR law implementation in 2014 on Bombay Stock Exchange and the Ministry of Corporate Affairs website. Using institutional and agency theory arguments, we hypothesize that ownership structure influences CSR spending. We use multiple logistics regression for our statistical analyses. Results: In line with our prediction, our results reveal that different ownership structures influence the variation in CSR spending. Foreign firms spend on CSR at par with the statutory mandate. Government firms spend above the statutory mandate, and promoter-owned firms spend below the statutory mandate. Conclusion: Through CSR spending on social development initiatives, firms can contribute to the United Nations' sustainable development goals (SDGs) and build their credibility among stakeholders. Our study explains the influence of different ownership structures on CSR spending in a mandatory CSR regime. This study can help policymakers revisit the CSR law provisions by understanding why some firms are spending more and why some firms are spending less on CSR and encourage firms to spend more on CSR initiatives. We leverage institutional and agency theory to explain our findings.