Corporate Social Responsibility Expenditure Research Articles

CSR and ownership structure: Moderating role of board characteristics in an emerging country context

AbstractThe existing literature on the impact of ownership structure on corporate social responsibility (CSR) showed inconsistent results and disregarded the possibility of non‐linear patterns in the relationship. The present study examines the non‐linear relationship between ownership structure (family, foreign, institutional, and government) and CSR expenditure of listed non‐financial service sector firms in India. Further, the moderating effect of board variables, including board size, board independence, multiple directorships and gender diversity, is explored in the ownership structure‐CSR nexus. Based on a balanced panel dataset of 243 non‐financial service sector companies listed in India, the study observed an inverse U‐relationship between institutional ownership and CSR. The study also found that family, foreign, and government ownership positively influence the firm's social engagement. However, the study could find partial support for the moderating role of the four board characteristics; board size, board independence, multiple directorships and gender diversity in ownership‐CSR association. The study contributes to existing CSR and corporate governance literature by exploring one of the major factors (ownership structure) impacting CSR and the role of board variables in the association.

Mineral resource drivers in the global south: A case study of Australia

Mineral resource depletion directly restricts sustainable mineral development. This study investigates the drivers of sustainable mineral resource development via an evolutionary game model involving mineral firms, the Australian government, and financial institutions. The tripartite model provides a guide to strategies and interactions with external influences based on company liquidity. Leveraging panel data from Australian mining companies from 2015 to 2022, this study utilizes unconditional quantile regression techniques, culminating in three salient discoveries. First, despite financial limitations, small-to medium-sized enterprises (SMEs) can accumulate ample resources to enhance their green technology R&D and corporate social responsibility (CSR) expenditure through diverse financing methods, thereby creating an internal strategic impetus for CSR perpetuation. Second, by participating in CSR, mineral firms can transmit positive signals in an asymmetric market, which promotes their sustainable development. Finally, despite the Australian government's R&D tax refund policy incentivizing R&D investment, SMEs' lack of innovative capacity has led to the diversion of operational funds, which negatively impacts their sustainable development. These findings provide valuable insights for sustainable mineral resource development that extend beyond Australia to other Southern Hemisphere nations.

Does corporate social responsibility spending affect cash ratio: Evidence from central public sector enterprises

AbstractThe researcher examines the effect of spending on corporate social activities on cash holdings. The financial dataset was collected using the Prowess database and corporate social responsibility expenditure from the Indian CSR portal. Using a panel dataset of 12 Central Public Sector Enterprises indexed in the National Stock Exchange was considered as a sample for the current research. A random effect model was applied to test the hypothesis. The study's findings provide a positive indication of the causal effect of spending in corporate social activities on cash holdings. The author has considered the expenditure amount of corporate social responsibility on the sample of public sectors undertaking of India. As in previous studies, authors had considered CSR ratings. This study provides proficient information to the top management level, shareholders, and stakeholders of the Central Public Sector Enterprises regarding the disbursement of corporate social activities in India.

Does Corporate Social Responsibility Expenditure Influence Tax Avoidance? Evidence from Tanzanian Listed Firms

This study examines the relationship between corporate social responsibility expenditure and tax avoidance in Tanzanian listed firms, utilising secondary data from 25 firms listed on the Dar es Salaam Stock Exchange over a ten-year period from 2013 to 2022. Employing a retrospective research design and purposive sampling, we applied the fixed effects model as the estimation technique. The analysis reveals a positive and significant association between corporate social responsibility expenditure and tax avoidance, indicating that firms with higher levels of corporate social responsibility expenditure are more likely to engage in tax avoidance practices. Furthermore, control variables such as firm size, profitability, and leverage also demonstrated positive and significant relationships with tax avoidance. The findings contribute to the understanding of the intricate dynamics between corporate social responsibility initiatives and tax management strategies in the Tanzanian context. The implications of this study extend to policymakers, suggesting the need for a nuanced approach to corporate tax regulation, taking into account the interplay between corporate social responsibility initiatives and tax management practices. Policymakers should recognise that firms engaging in higher corporate social responsibility activities may employ tax planning strategies that warrant attention in regulatory frameworks. This study contributes to the ongoing discourse on the complex dynamics between corporate social responsibility and financial decision-making in emerging market contexts.

Exploring corporate social responsibility expenditures in manufacturing firms

The main aim of this study is to explore corporate social responsibility expenditure in Indian manufacturing firms. The study sample consists of 62 firms listed on the Bombay Stock Exchange (BSE). Findings revealed that environment and pollution control expenses vary significantly between mature and young firms and before and after the pandemic as well. Moreover, regression analysis results show that employee compensation expenses negatively affect firms’ performance. these results contradict Nwanne (2016), Walker (2019), and Tulcanaza-Prieto et al. (2020). Similarly, social and community expenses negatively and significantly impact the performance of Indian manufacturing firms. These results consist with Gangi et al. (2018), Tulcanaza Prieto et al. (2020), Kvasić et al. (2016), and Nwanne (2016). On the contrary, donation-related expenses positively affect the profitability of Indian manufacturing firms. These results are consistent with Nwanne (2016), and Gangi et al. (2018). Therefore, this study has three folds of contributions. Firstly, it attempts to unveil corporate social responsibility (CSR) expenditures after the Companies Act, 2013 using a large sample and a longer period of study and making a comparison between mature and young firms Indian manufacturing companies. Secondly, this study examines the impact of the COVID-19 pandemic on CSR expenditures. Finally, hardly any study has relied on secondary data for conducting sustainability or CSR expenditure research in the Indian context. Hence, this study addresses this void by relying on secondary data to examine CSR expenditures during the pandemic.

Do pressure-sensitive institutional investors moderate CSR decisions towards value creation of Indian firms?

Purpose Research on the significance of corporate social responsibility (CSR) and value creation is nascent as compared to CSR and financial performance. The concept of value is also evolving because of changing business environments, globalization and the expanded idea of CSR. Nowadays, managers expect a more quick, pragmatic approach to satisfy valid stakeholder claims while simultaneously creating competitive advantage through reputation and investor value. The paper aims to examine the impact of CSR on the market and sustainable value creation through CSR expenditure in India and the moderating role of pressure-sensitive institutional investors (PSII). Design/methodology/approach The study used panel data regression methodology on a sample of 1,845 non-financial Indian firms from 2015 to 2021. Findings CSR creates market and sustainable value for non-financial Indian firms in line with stakeholder theory. The authors find a positive moderating role of governance represented by PSII on CSR and market value creation but not on sustainable value. Research limitations/implications The study is based on secondary data. CSR, despite being a regulatory obligation, provided long-term benefits that increased their sustainable growth rate. The results highlight the importance given by financial markets to CSR activities. Other types of institutional investors can also be examined in future research. CSR can be embedded in the core operations of the firm, which can help in fostering a culture of sustainability and responsible business practices that benefit firms and society as a whole. Tax incentives can be provided to firms investing in CSR. Practical implications CSR provides long-term benefits to the firm, which enhances the goodwill and integrity of the firm in the market. The results reveal that besides capital market investors, firms are subject to the scrutiny of consumers, communities and the government as expectations rise and information spreads faster, which can have repercussions. CSR helps in meeting such expectations and the perceived value of the firms. Managers and chief executive officers (CEOs) can pay attention to the type of institutional investors like PSII, which can be formed as a part of the firm’s CSR strategy. Social implications The positive impact of CSR on sustainable value expresses a long-term management orientation based on the improvement of stakeholder relations and the associated environmental impacts referring to cohesion and consensus, market opportunities and strengthened reputation and image. A sustainable company involves a conscious and continuing effort in the equilibrium between contrasting stakeholders’ expectations in an attempt to optimize value creation. Tax exemption can be provided for CSR activities. Originality/value The authors contribute to the scant literature on CSR and value creation, especially sustainable value, as most of the prior studies are not empirical on sustainable value in the Indian context. Managers and CEOs can pay attention to the types of institutional investors like PSII, which can be formed as a part of the firm’s strategy.

Business response to mandatory corporate social responsibility with evidence from India

AbstractThere has been a lot of discussion on the shift from voluntary to mandatory corporate social responsibility (CSR) and its impacts in different countries across the globe. India is unique in this context as the reporting and expenditure of a certain amount under CSR has been mandated for companies. This article analyzes the changes and responses of Indian businesses post‐2014, when new CSR rules were enacted. The key objectives of this study are to assess the level of awareness and compliance, thematic and geographical focus areas for CSR projects, and drivers and barriers to the adoption of mandatory CSR. We performed a secondary analysis of the data from 60 companies, followed by extensive primary research through in‐person interviews and offline questionnaire responses with 100 key CSR professionals from different companies in India. A key finding from the study is that the awareness of CSR policy and the pool of CSR funds has increased. The policy mandates have been a good driver in improving transparency and reporting quality. However, there is a predominant focus on four thematic areas of education, healthcare, hunger, and poverty alleviation despite the government's efforts to expand in other areas. The geographical spread of expenditure is limited to a few key industrial states in India, limiting CSR's contribution towards national development. The study adds to the CSR literature associated with institutional and stakeholder theories by looking at the response of legally bound organizations toward society and the environment. Finally, the study provides valuable information for governments and regulatory authorities considering the mandatory implementation of CSR expenditure across the globe.

Mandatory CSR spending, ESG and firm performance: evidence from Bombay stock exchange

PurposeThe study attempts to examine the impact of mandatory corporate social responsibility (CSR) spending and inclusion of firms into the environment, social and governance (ESG) index of BSE India on the performance of firms constituting firms under the Bombay Stock Exchange (BSE) 100 Index.Design/methodology/approachThe stock prices of the firms were collected from the official website of BSE India for a total of 32 firms and the System Generalized Method of Moments (GMM) model was utilized for analyzing the data for the present study.FindingsThe study found that the investors in the Indian market do consider the CSR spending and ESG listing as a factor while framing the investment strategy; however, ESG listing is least preferred. Among the other variables, AGE, DPS, EPS and BVPS have a significant positive bearing on the firm's performance, while SIZE has a significant negative impact on the firm's performance.Research limitations/implicationsFurther investigation is needed to understand the factors that influence investment decision-making, including why investors tend to overlook CSR and environmental protection. Future research can identify ways to increase the importance of these factors in investment decision-making. Future research can explore the long-term impact of investing in socially responsible companies, including whether such investments lead to better long-term performance.Practical implicationsThere is a need for increased awareness of the importance of CSR among investors. Educational programs and campaigns can be used to inform investors about the potential benefits of considering social responsibility factors in investment decision-making. Companies that prioritize CSR and environmental protection should distinguish themselves from competitors in the eyes of investors. This can lead to higher investment and potentially higher returns for these companies.Originality/valueSince mandatory CSR expenditure and the launch of the ESG index by the BSE have been introduced in India recently, hardly any study in India has examined the impact of the same on the firm's performance.

An Examination Of The Implication Of Corporate Social Responsibility Measures In Chosen Indian Public Sector Banks Amidst The Covid-19 Pandemic

Purpose: This paper explores the evolution of Corporate Social Responsibility (CSR) and focuses on how banks have expanded their CSR activities beyond traditional banking roles, particularly during the pandemic. It highlights the critical role CSR plays in addressing challenges and fostering a socially responsible corporate landscape. With a special emphasis on the diverse aspects of CSR practices, this paper will explore how company responsibilities and social obligations have advanced over time. It includes the compiled report of CSR expenditures of selected public sector banks in India. And encompasses the challenges faced by the banking sector and the significance of CSR in addressing them. The research also throws light on potential criticisms or shortcomings in the selected banks' approaches. Lastly, this paper will talk about how some banks have come forward with diverse aspects of social obligation and shored up an important position during the pandemic. Design/Methodology/Approach: This paper is conceptually written, involving a cross-sectional study entailing the qualitative analysis of various CSR activities taken up by banks in India during the pandemic. To analyze the spending and CSR activities, data was collected from the bank's annual reports and their websites Findings: This article discusses how Corporate Social Responsibility (CSR) is transforming into a "self-regulating business approach." considering both performance and the influence of stakeholders. This suggests that a certain perception of social responsibility largely stems from an organization's interactions with its stakeholders and the public. As for the pandemic, CSR initiatives have shifted their focus towards combating COVID-19, with the potential for indirect benefits to the organization.

An Analysis of CSR and its Expenditure in India in the Terms of Trends, Impact and Challenges

The United Nations Industrial Development Organisation (UNIDO) has defined corporate social responsibility (CSR) as "a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. CSR is a way in which companies achieve a balance of economic, environmental and social imperatives". Corporate Social Responsibility (CSR) has emerged as a crucial aspect of business operations worldwide, with companies recognizing their responsibility to contribute positively to society. In India, the CSR landscape has witnessed significant growth and transformation since the introduction of the Companies Act, 2013, mandating qualifying companies to allocate a portion of their profits towards CSR activities. This research paper delves into the CSR expenditure in India, aiming to analyze the trends, impact, and challenges faced by corporations in fulfilling their CSR commitments. The study employs both qualitative and quantitative research methods, including data analysis, case studies, and interviews with key stakeholders to gain comprehensive insights into the subject matter. The paper sheds light on the effectiveness of CSR initiatives and provides valuable recommendations for enhancing CSR practices in India. Since the enactment of CSR provisions in April 2014, companies have spent nearly 1.27 trillion rupees or 1.27 lakh crore rupees in a span of seven years as per the data available on the National CSR Portal based on the disclosures made by companies. This money has been spent across 29 different sectors such as health, education, environment, welfare, development, and others. From over Rs. 10,065 crores spent in 2014-15, the CSR expenditure in India has increased to Rs. 25,715 crores in 2020-21 registering a 2.5-times increase in the seven years of implementation. With nearly Rs. 36,815 crores, the education sector received 29% of the CSR expenditure between 2014-15 and 2020-21. The health sector comes next with 20% of the CSR expenditure of Rs. 25,391 crores. More than Rs. 12,300 crores were spent in Rural development projects which accounted for 9.7%. The three sectors are the only ones to receive more than Rs. 10,000 crores each of CSR expenditure and together accounted for nearly 59% of the total CSR expenditure incurred in the country in seven years. Environmental sustainability, malnutrition, hunger and poverty, livelihood enhancement projects, central government funds including PMNRF, sanitation, art & culture, and vocational skills received more than Rs. 2000 crores each and together contributed to another 29.4% of the expenditure. Safe drinking water, women empowerment, natural resources conservation, gender equality, animal welfare, orphanages, armed forces (veterans, war widows, etc.), special education, SwachchBharathKosh, sports, technology incubators, senior citizens welfare, agroforestry, slum area development, and socio-economic inequalities are the other sectors in which CSR amount is used. These sectors accounted for <9% of the CSR expenditure. For the remaining expenditure (~3%), companies have not disclosed the details of the projects.

State Ownership and Corporate Social Responsibility: An Investigation on Nigerian Data

Purpose: The paper examines the central issue underpinning the growing international literature and arguments that different ownership types have varying implications for a firm’s CSR engagement. It compliments evolving studies by looking at the effect of state ownership and other types of ownership structures on CSR, specifically in the Nigerian industry. It is argued that the impact of ownership structure on corporate decisions to allocate resources to Corporate Social Responsibility (CSR) has assumed renewed significance in the burgeoning literature of developing economies, given the exigency for corporate executives to allocate firm specific resources to other social objectives that may detract from profit maximization.
 Methodology: This paper differs markedly from the methodologies of previous studies which used composite CSR indices. It deconstructs CSR expenditure into five categories – public goods, socially desirable goods, corporate philanthropy, employee relations and environmental conservation – and estimates the effects of government, foreign and institutional ownership on CSR variables controlling for such factors as firm size, return on assets and capital intensity. Using new data on listed Nigerian firms, this paper carries out its empirical investigation with panel data estimation in order to deal with heterogeneity and endogeneity issues.
 Findings: The findings of this paper indicate that different ownership structures have varying implications for the five forms of CSR investigated in this study. It reveals that government ownership has no significant effect on CSR expenditure on public goods, corporate philanthropy and environmental conservation. However, it finds that government ownership also significantly influences CSR expenditure on socially desirable goods and employee relations.
 Unique contribution to theory, practice and policy:Theoretically, this paper extends the trajectory of CSR discourse to include an elaborate investigation of the impact of ownership structures on CSR practices in all the major sectors of Nigerian economy.The paper argues that its empirical results have several policy implications for good corporate governance practices in Nigeria and other emerging economies. This paper suggests the need to institute incentives schemes and regulatory constraints that would compel government, foreign and institutional ownership to align their incentives with some forms of CSR practices.

Does CSR affect tax avoidance? Moderating role of political connections in Bangladesh banking sector

PurposeThis study aims to investigate whether socially responsible businesses with corporate social expenditure are less prone to engaging in tax avoidance. The study also examines whether political connections moderate the association between corporate social responsibility (CSR) and tax avoidance.Design/methodology/approachThe study uses ordinary least squares to analyse the panel data of all 30 listed banks on the Dhaka Stock Exchange covering 2012 to 2020. The study uses a set of alternative variables to check the robustness of the findings.FindingsConfirming the corporate culture theory, the study findings indicate that the higher the firms’ CSR expenditure, the lower the tax avoidance. Contrarily, the moderating effect of political connection weakens the role of CSR in tax avoidance, implying that political relation makes the firms socially irresponsible. Besides, the findings document that firms with strong political connections are more likely to be tax aggressive by weakening the role of CSR. The findings imply that firms with weaker political connections are more socially responsible than firms with strong political ties.Research limitations/implicationsThe study provides the bank management and regulatory bodies valuable insights to take necessary actions so that they can easily monitor whether the banks follow their instructions regarding CSR and tax payments. As the politicians make the firm socially irresponsible, the regulatory bodies and bank management should not keep them or their relatives on the board.Originality/valueThe study contributes to the CSR and tax avoidance literature considering the moderating role of political connections in Bangladesh banking sector.

The Effect of Corporate Social Responsibility Expenditure and Board National Diversity on Firm Value with the Availability of Sustainability Report as a Moderation Variable

This study is to provide evidence on the effect of corporate social responsibility expenditure and board national diversity on corporate value. We also test the role of the availability of sustainability reports as a moderating variable on this relationship. Our samples are Indonesian-listed companies on the Indonesia Stock Exchange from 2011 to 2020. Tobin's Q is used to measure firm value. The CSR expenditure is measured by the amount of CSR expenditures reported in the annual report. In contrast, the board’s national diversity is measured by the company’s ratio of foreign board members. The availability of sustainability reports is a dummy variable. The results suggest that CSR expenditure and board diversity do not affect firm value. Moreover, the results indicate that the availability of sustainability reports has a negative moderating effect on the relationship between the ratio of foreign commissioners and firm value, and, on the contrary, has a positive impact on the relationship between the ratio of foreign members of the board of commissioners and firm value. We may imply that companies with a high proportion of foreign member boards of commissioners and provide sustainability reports have higher firm value than companies that do not provide sustainability reports. Our study suffers from some limitations. First, most of our samples do not have foreign commissioners on their board. Second, the Indonesian authority does not strictly regulate the disclosure practices of CSR-related expenditures. Third, future researcher may use another measure of sustainability report, like the quality of the report.

Equity market performance: The role of environmental protection and corporate social responsibility efforts

AbstractBusinesses that contribute to social welfare and development are regarded as reliable and generate more wealth for their stakeholders. This study attempts to determine how corporate social responsibility (CSR) and environmental protection measures influence the financial performance of Indian businesses. A panel dataset containing 330 Nifty 500 companies is included to determine their relationship. The quarterly and semi‐annual share prices are employed as proxies for the financial performance of companies. In the regression model, the lagged share prices (log) of two periods serve as the response variable, while the CSR and the CSR plus the environment and pollution control expenses (CSREP) serve as explanatory variables. The results suggest that the fixed‐effect regression model is suitable where the explanatory variables are time‐invariant and the relationship between the dependent and explanatory variables across firms is constant over time. Our analysis indicates that CSR spending alone has little effect on the share prices of companies over two prospective time periods. However, as companies invest more in environmental and pollution control activities in addition to their CSR expenditure, the market recognises this as a significant factor, and their share prices rise. Consequently, we discovered that CSREP (CSR plus environmental and pollution control expenditure) is a significant factor that influences quarterly and semi‐annual share prices.

CSR Contributions for Environmental Sustainability: A comparison of private banks in emerging market

Over the years corporate social responsibility (CSR) has become a source of competitive advantage for firms including banks. CSR is one of the important aspects of a private bank’s contribution to society apart from its functionality. The extant literature shows a scantiness of research concerning the assessment of the efficiency of banks in CSR expenditure towards environmental sustainability. The current work fills the gap in the literature by providing a multi-objective assessment framework to measure and compare the leading private banks based on their efficiency in CSR vis-à-vis environmental sustainability. This paper aims to study the ideal and actual contribution of the Indian private banking sector toward environmental sustainability and other sectors. This is done by using data from 10 private sector banks over 7 financial years and comparing their efficiencies over time using optimization techniques like Data Envelopment Analysis. To study the change in CSR contribution over time, the Malmquist Index has been used. City Union and HDFC have shown the highest contribution towards environmental sustainability as a part of their CSR acts consistently over the years irrespective of the income generated. The outcome of the present paper shall enable the decision-makers to formulate of the appropriate policies.

Legitimising CSR through the institutional backup – gauging compliance of the Indian corporate sector in the mandatory regime

PurposeThis study aims to calculate the corporate social responsibility (CSR) expenditure made by companies as per the provisions of Section 135 of Companies Act 2013 and check the status of compliance/non-compliance of these provisions in the mandatory regime of CSR.Design/methodology/approachBased on a sample of top 500 Indian companies listed on Bombay Stock Exchange, the study compares the CSR expenditure required to be incurred by companies with the actual CSR expenditure made by them over a time span of seven years and calculates the extent of surplus or deficit attained by them starting from the year of inception of CSR provisions, 2014–2015, till the most recent year, 2020–2021.FindingsThe findings indicate that the average CSR expenditure made by Indian corporate sector is less than the mandatory requirement. More than half of the companies do not comply with the CSR regulations of the country. Even the “Most Profitable” companies fail to contribute the minimum required amount towards social activities akin to their counterparts in the “Less” and “Least” profitable categories.Practical implicationsThe disobedience towards the statutory provisions implies that Indian companies are non-compliant towards CSR guidelines despite the regulative institutional pressure that makes CSR a mandatory practice to legitimise it.Originality/valueThe study contributes to the CSR literature in the light of the transformed regulative institutional environment in India. It includes a comprehensive analysis of compliance of companies with the revised statutes over all the years since the inception of new mandatory guidelines on CSR till the most recent time period on a representative sample, thus, making the findings robust and generic with respect to India.

Valuation Implications of Mandatory CSR Expenditure in India

We examine the value‐relevance of corporate social responsibility (CSR) expenditure utilizing the Indian setting of mandatory CSR spending regulation which commenced in 2014. India is the only country where regulators mandate both CSR reporting and spending. Our interest is in two types of firms that meet the minimum specified thresholds: firms that voluntarily made CSR expenditures pre‐regulation (voluntary spenders) and firms that did not (forced spenders). This separation in revealed preference allows researchers and investors to observe, at least on average, a firm's true CSR strategy type (proactive/leader versus reactive/follower) through their pre‐regulation expenditure strategy. This unique quasi‐experimental setting allows us to investigate whether CSR spending is positively associated with shareholders’ value, both when spending was voluntary pre‐regulation (for voluntary spenders) and after it became mandatory post‐regulation (for voluntary and forced spenders). We find that for voluntary spenders, the markets assess CSR expenditure as valuation‐enhancing pre‐regulation, but post‐regulation the valuation benefits are significantly weakened. The market's assessment is that a forced spender's (imposed) CSR expenditure is, on average, less valuable than that of voluntary spenders, consistent with such spending being viewed as a form of corporate taxation. Further, we find that shortfalls from the required spending amount are penalized by the market for voluntary spenders but rewarded for forced spenders. We also find that advertising appears to play an important communication role both pre‐ and post‐regulation. We view the results as being consistent with the notion that mandated expenditures are viewed differently than those made voluntarily.

The Impact of Corporate Social Responsibility Expenditure on Firm Profitability: An Examination of the IT and Pharmaceutical Sectors in India

The Impact of Corporate Social Responsibility Expenditure on Firm Profitability: An Examination of the IT and Pharmaceutical Sectors in India

Nexus of Corporate Social Responsibility Expenditure (CSR) and financial performance: Indian banks

This paper investigates the influence of mandatory Corporate Social Responsibility (CSR) expenditure, as stipulated by the Indian Companies Act of 2013, on the financial performance of commercial banks in India. Employing Panel regression models, the study examines the association between CSR expenditure and the financial performance of 22 Indian banks from 2016 to 2022. To measure financial performance, three different profitability indicators and market returns are utilized as proxies. Additionally, four control variables, namely size, risk, age, and capital intensity, are incorporated for robustness analysis. The findings reveal a positive impact of CSR expenditure on the profitability of Indian banks. However, no significant relationship is observed between CSR expenditure and the market returns of the Indian banks.

Corporate social responsibility expenditure and financial performance: the moderating role of family ownership

Purpose The paper aims to examine how Indian non-financial service sector companies’ financial performance is influenced by their corporate social responsibility (CSR) expenditures. The paper also analyses whether family ownership has a moderating role in the CSR expenditure–financial performance association. Design/methodology/approach The study includes 288 non-financial service sector companies listed in India with 3,456 firm-year observations. Panel data regression analysis using data for 12 years, starting from 2010 to 2021, is carried out. Findings The study reveals a positive influence of CSR spending on financial performance measures (Tobin’s Q and return on assets). Mandatory CSR policies also influence the company’s performance. Additionally, family ownership has a positive moderating effect on CSR expenditure–financial performance (Tobin’s Q). Research limitations/implications The study gives insights to the managers on how CSR expenditures can be used to maximise their benefits by supporting social causes, particularly in the case of firms with ownership structures where family involvement is there. Originality/value The prior studies analysing family ownership effect on the CSR–financial performance relationship are fewer, and in a country like India, where corporate philanthropy is a part of the family business culture, there is a need to understand how CSR spending influences firm performance.