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Corporate social responsibility, business groups and financial performance: a study of listed Indian firms

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  • Woo Sung Kim
  • Sekyung Oh

Abstract

This study explores the relationship between corporate social responsibility (C.S.R.) and financial performance of Indian firms. We also examine the relationship between C.S.R. and financial performance in context of Indian business group firms, which are known to have unique characteristics which differ from those of Indian stand-alone firms. Using a sample of Indian listed firms between 2010 and 2015, we find that C.S.R., as measured by E.S.G. disclosure score, has a U-shaped relationship with Tobin’s Q, supporting the slack resource theory at lower level of CSR and supporting the stakeholder theory at higher level of C.S.R. The empirical results imply that an improvement in CSR actions does not always result in higher firm value but should exceed a certain level of C.S.R. to have a positive effect on firm value. In addition, we find that at lower level, a negative relationship between C.S.R. and Tobin’s Q weakens in group affiliate firms. However, this complement effect of business group disappears at higher level, weakening the positive relationship between C.S.R. and Tobin’s Q. This study offers new insights for the different influence of business groups on C.S.R. performance.

Suggested Citation

  • Woo Sung Kim & Sekyung Oh, 2019. "Corporate social responsibility, business groups and financial performance: a study of listed Indian firms," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 32(1), pages 1777-1793, January.
    • Handle: RePEc:taf:reroxx:v:32:y:2019:i:1:p:1777-1793
    DOI: 10.1080/1331677X.2019.1637764
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    Cited by:

    1. Saeed, Asif & Alnori, Faisal & Yaqoob, Gohar, 2023. "Corporate social responsibility, industry concentration, and firm performance: Evidence from emerging Asian economies," Research in International Business and Finance, Elsevier, vol. 64(C).
    2. Ye Lim Jung & Hyoung Sun Yoo, 2023. "Environmental, social, and governance activities and firm performance: Global evidence and the moderating effect of market competition," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 2830-2839, November.
    3. Zaheer Alam & Yasir Bin Tariq, 2023. "Corporate Sustainability Performance Evaluation and Firm Financial Performance: Evidence from Pakistan," SAGE Open, , vol. 13(3), pages 21582440231, July.

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