CSR as Investment: An Analysis of Ownership Structure and Firm Performance



CSR can be considered as an investment which is decided by the owners of the firm, and it can affect the performance of the firm. In this paper, we try to analyse how spending in CSR is related to the ownership pattern and firm performance in India. First, we analyse the CSR expenditure of Bombay Stock Exchange (BSE)-listed Indian firms and try to look at the changes in the number of firms actually spending on CSR over the years 2010–2015 due to the mandate on CSR spending in the Companies Act of 2013. Second, we analyse how the ownership structure, firm size and leverage of a firm affect its CSR expenditure. Finally, we look at the relationship between the performance of a firm and the CSR spending in these years. We use 176 listed firms in the BSE sourced from Centre for Monitoring Indian Economy’s (CMIE) PROWESS database. We find that CSR spending and institutional ownership share have a positive relationship while the leverage of the firm has a negative relationship with CSR spending. We also find that CSR spending has a circular causation with firm performance. It has a significant and positive influence on the firm value while the firm value affects CSR spending positively.


Corporate social responsibility Ownership structure Size Firm performance Leverage 

JEL Classification

G32 L25 M14 


  1. Aupperle, K. E., Carroll, A. B., & Hatfield, J. D. (1985). An empirical examination of the relationship between Corporate Social Responsibility and profitability. Academy of Management Journal, 28(2), 446–463.CrossRefGoogle Scholar
  2. Boyd, B. K. (1994). Board control and CEO compensation. Strategic Management Journal, 75, 335–344.CrossRefGoogle Scholar
  3. Freeman, R. (1984). Strategic management: A stakeholder approach. Boston, MA: Pitman.Google Scholar
  4. Friedman, M. (1970). Social responsibility of business. New York Times Magazine.Google Scholar
  5. Graves, S. B., & Waddock, S. A. (1994). Institutional owners and corporate social performance. The Academy of Management Journal, 37(4).Google Scholar
  6. Iqbal, N., Ahmad, N., Basheer, N. A., & Nadeem, M. (2012). Impact of corporate social responsibility on financial performance of corporations: Evidence from Pakistan. International Journal of Learning & Development.Google Scholar
  7. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.CrossRefGoogle Scholar
  8. Johnson, R. A., & Greening, D. W. (1999). The effects of corporate governance and institutional ownership types on corporate social performance. Academy of Management Journal, 42, 564–576.CrossRefGoogle Scholar
  9. Li, F., & Forster, T. (2010). Corporate social responsibility and financial performance following the global financial crisis. Available at SSRN:;
  10. Li, W., & Zhang, R. (2010). Corporate social responsibility, ownership structure, and political interference: Evidence from China. Journal of Business Ethics, 96, 631–645.CrossRefGoogle Scholar
  11. Manchiraju, H., & Rajgopal, S. (2015). Does corporate social responsibility (CSR) create shareholder value? Exogenous shock-based evidence from the Indian Companies Act 2013. Available at:
  12. Mishra, S., & Suar, D. (2010). Does corporate social responsibility influence firm performance of Indian companies? Journal of Business Ethics, 95(4).Google Scholar
  13. Moussu, C., & Ohana, S. (2016). Do leveraged firms underinvest in corporate social responsibility? Evidence from health and safety programs in U.S. firms. Journal of Business Ethics.Google Scholar
  14. Udayasankar, K. (2008). Corporate social responsibility and firm size. Journal of Business Ethics, 83(2), 167–175.CrossRefGoogle Scholar
  15. Waddock, S. A., & Graves, S. B. (1997). The corporate social performance-financial performance link. Strategic Management Journal.Google Scholar
  16. Zahra, S. A. (1996). Governance, ownership, and corporate entrepreneurship: The moderating impact of industry technological opportunities. Academy of Management Journal, 39, 1713–1735.CrossRefGoogle Scholar

Copyright information

© Springer Nature Singapore Pte Ltd. 2017

Authors and Affiliations

  1. 1.Centre for Economic Studies and Planning (CESP)Jawaharlal Nehru UniversityNew DelhiIndia

Personalised recommendations