CSR disclosures and profit persistence: evidence from India

Abstract

PurposeThe purpose of the present study is to analyze the impact of corporate social responsibility (CSR) disclosures on firms' profitability and its persistence.Design/methodology/approachThe study has been conducted for listed firms operating in India from 2008 to 2017. Content analysis has been utilized to estimate the CSR disclosures score. Further, dynamic panel regression has been utilized to estimate the relationship between CSR disclosures and profit persistence.FindingsThe results confirm positive profit persistence for Indian companies. The results further show that different dimensions of CSR disclosure have differential impact on firms' profitability. CSR dimensions concerning total community development and product-related disclosures have a positive relationship, whereas dimensions related to environmental and customer-related disclosures have a negative relationship with financial performance. The results also indicate that CSR disclosures are significantly related to profit persistence.Originality/valueThe study is first of its kind that analyzes the impact of CSR disclosure on profit persistence for Indian companies. The results can provide useful implications for managers and regulators in terms of formulation of overall CSR policies.

Multidimensional corporate social responsibility disclosure and financial performance: A meta‐analytical review

“…carrotsandsticks.net/. 9 Proxies refers to the unidimensional measure of CSRD, such as salaries, interests, and public expenses minus social cost divided by total equity, corporate philanthropy (Lu et al, 2021); Reputed ratings/scores are the evaluations of the corporate policies by experts such as KLD ratings, RKS ratings, AMAC ratings and ESG score; content analysis is a qualitative method in which information of corporate publications such as annual report, sustainability report is coded to measure CSRD; In survey CSRD is measured through survey instrument such as questionnaire; third party index refers to measuring CSRD through the index prepared by academicians such as Gjølberg (2009) and Jaisinghani and Sekhon (2020). assumed that the variability of effect size is generated by sampling error and systematic between-study variations (Borenstein et al, 2009).…”

“…The issue of endogeneity can be resolved by addressing potential instrumental variables (IVs) (Wooldridge, 2013). Previous literature suggests that studies that considered lagged DV (as IV) as independent variables have more robust results (Jaisinghani & Sekhon, 2020; Lu et al, 2021; Zahid et al, 2020). Thus, this study expects the studies addressing the reverse causality problem through IV's have more robust and conclusive results.Hypothesis The impact of CSRD on FP is influenced by lagged DV .…”

The impact of corporate social responsibility on the corporate financial performance: evidence from Russian and Dutch companies

“…It is also important that proxies for the total ESG and its components (social, environmental and governance proxies) tend to be higher for firms with high assets and high financial leverage. Jaisinghani and Sekhon [46] inquired into the profit persistence of Indian companies that disclose their CSR. The overall impact was found to be significantly positive, while individual dimensions of CSR disclosure demonstrate a mixed impact on company profitability.…”

“…Peng, Yang, 2014 [38] Elouidani, Faical, 2015 [39] Garcia-Blandon et. al., 2020 [40] Overall negative Brammer, Millington, 2008 [41] Wang et al, 2008 [42] Barnett, Salomon, 2012 [43] U-shape Braga-Alves, Shastri, 2011 [44] Alareeni, Hamdan, 2020 [45] Jaisinghani, Sekhon, 2020 [46] Ambiguous Source: Adapted by the authors from the existing literature.…”

The Relationship of Corporate Social Responsibility and Firm Performance: A Bibliometric Overview

“…There have been attempts to measure the direction of this relationship (Maqbool & Zameer, 2018; Waddock & Graves, 1997) and to solve various methodological issues and conceptual operationalization of the different constructs measuring corporate social responsibility and firm performance (McWilliams & Siegel, 2000). The recent studies relating to CSR and Financial performance have given a negative (Jyoti & Khanna, 2021; Sekhon & Kathuria, 2019), positive (Bag & Omrane, 2022; Cordeiro et al, 2021), and mixed (Jaisinghani & Sekhon, 2022; Oware & Mallikarjunappa, 2022) relationship. Researchers have attributed these inconsistencies to the incongruity of stakeholders, lapses in theoretical foundations, conceptual factors of CSR, methodological differences, and functional deviations in the measurement aspect of CSR and financial performance (Lu et al, 2014; H.…”