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The Value Relevance of Corporate Social Responsibility Expenditure: Evidence from Regulatory Decisions

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  • Sudipta Bose
  • Amitav Saha
  • Indra Abeysekera

Abstract

We examine the value relevance of the corporate social responsibility (CSR) expenditure of Bangladeshi banks from 2007–2014 in response to a regulatory directive on banking firms’ engagement in CSR activities. We find a positive association between CSR expenditure and a firm's market value. Evidence of an inverse U‐shaped curvilinear association between CSR expenditure and market value suggests that the impact of CSR expenditure on a firm's market value has a certain limit. We also document that unexpected or abnormal components of CSR expenditure comprise value‐relevant information. Our study provides empirical evidence to support the value relevance of CSR expenditure as an explanation for why firms should invest in CSR and why they should inform various stakeholders about their CSR activities.

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  • Sudipta Bose & Amitav Saha & Indra Abeysekera, 2020. "The Value Relevance of Corporate Social Responsibility Expenditure: Evidence from Regulatory Decisions," Abacus, Accounting Foundation, University of Sydney, vol. 56(4), pages 455-494, December.
    • Handle: RePEc:bla:abacus:v:56:y:2020:i:4:p:455-494
    DOI: 10.1111/abac.12207
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    4. Fariha Jahan & Jungmu Kim, 2023. "Does the Shield Effect of CSR Work in Crises? Evidence in Korea," Sustainability, MDPI, vol. 15(11), pages 1-18, June.
    5. Driss, Hamdi & Drobetz, Wolfgang & El Ghoul, Sadok & Guedhami, Omrane, 2024. "The Sustainability committee and environmental disclosure: International evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 221(C), pages 602-625.
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    7. Sudipta Bose & Chuan Yu, 2023. "Does Earnings Quality Influence Corporate Social Responsibility Performance? Empirical Evidence of the Causal Link," Abacus, Accounting Foundation, University of Sydney, vol. 59(2), pages 493-540, June.

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