CSR and corporate performance: evidence from India

Abstract

CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large (WBCSD in corporate social responsibility: meeting changing expectations. BCSD Publications, Geneva, 1998, p 3). There is ample research done on CSR and corporate performance. CSR has proven beneficial in increasing the business profile and reputation of companies at local, national, and international level. Some contrary findings are also present which might be due to different economic conditions, different time periods, and different sample sizes. The present study has made an attempt to investigate the impact of CSR on performance of Indian corporate sector. The analysis has been confined to all those companies which are included in the S&P BSE CARBONEX Index (as on March 31, 2014) for ten financial years from 2004�05 to 2013�14. Data have been collected with the help of annual reports of selected companies and PROWESS database. Result of panel data regression analysis reveals that CSR impacts the value of Indian corporate sector highly and significantly. Further, the results suggest that CSR performance of companies impacts corporate performance not only for current year, but also for the following years. Trend of CSR performance has also been analyzed to assess whether the companies have improved over the period of time or not. Results of paired t test and Wilcoxon signed rank test disclose that CSR performance of sample firms has significantly improved over the period of study. Further, the present study has tried to analyze CSR on the basis of ownership (public vis-�-vis private companies) which confirms that CSR performance of public sector companies is better than private sector. The results further reveal that CSR performance of companies differs significantly across industries.