Does Corporate Social Responsibility (CSR) Create Shareholder Value? Evidence from the Indian Companies Act 2013

• 成果类型: Article
• 署名作者: Manchiraju, Hariom; Rajgopal, Shivaram
• 署名单位: Indian School of Business (ISB); Columbia University
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12174
• 发表日期: 2017
• 页码: 1257-1300
• 关键词: regression-discontinuity designs; Causal Inference; Firm value; OWNERSHIP; IMPACT; management; POLITICS; section; COSTS

摘要

In 2013, a new law required Indian firms, which satisfy certain profitability, net worth, and size thresholds, to spend at least 2% of their net income on corporate social responsibility (CSR). We exploit this regulatory change to isolate the shareholder value implications of CSR activities. Using an event study approach coupled with a regression discontinuity design, we find that the law, on average, caused a 4.1% drop in the stock price of firms forced to spend money on CSR. However, firms that spend more on advertising are not negatively affected by the mandatory CSR rule. These results suggest that firms voluntarily choose CSR to maximize shareholder value. Therefore, forcing a firm to spend on CSR is likely to be sub-optimal for the firm with a consequent negative impact on shareholder value.