Corporate social responsibility and firm market performance: a study of Indian listed companies

Abstract

This paper uses the flow of information relating to the introduction of mandatory CSR expenditure in India as the vehicle to measure investor perceptions of the impact of such spending on company profitability. We use both event study and regression analysis methodology and find that when mandatory CSR spending was first mooted in mid-2008, investors started out with the expectation that more CSR expenditure would increase future corporate profitability. However, by the time that the legislation was passed in August 2012, these expectations had changed to where they expected the opposite to hold.