Mandatory Corporate Social Responsibility: The Indian experience

The question we raise is what to do when companies fail to keep pace with societal expectations with respect to their corporate social responsibility (CSR). The response of the Indian government was to make it mandatory for large corporations to spend funds on CSR activities. In this paper, we inves...

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Bibliographic Details
Published inJournal of contemporary accounting & economics Vol. 14; no. 3; pp. 254 - 265
Main Authors Mukherjee, Abhishek, Bird, Ron, Duppati, Geeta
Format Journal Article
LanguageEnglish
Published Elsevier Ltd 01.12.2018
Subjects
Corporate response
Corporate Social Responsibility (CSR)
Impact on profitability
Indian legislation
Mandatory
M14
Indian legislation
CSR
Corporate response
Corporate Social Responsibility (CSR)
Impact on profitability
G38
DiD
Mandatory
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Summary:The question we raise is what to do when companies fail to keep pace with societal expectations with respect to their corporate social responsibility (CSR). The response of the Indian government was to make it mandatory for large corporations to spend funds on CSR activities. In this paper, we investigate the success of this legislation both for the companies and the intended beneficiaries. We find that the impact of the legislation has fallen short of expectations both in terms of the volume of CSR expenditure generated and the activities to which it has been directed. In particular, we find that the legislation has had a negative corporate profitability which can impact on the willingness of companies to spend in this area. We conclude that greater care must be taken when implementing mandatory CSR if it is to be effective.
ISSN:1815-5669
DOI:10.1016/j.jcae.2018.06.002