The study examines the impact of Corporate Social Responsibility (CSR) spending on financial performance among India’s top CSR-spending firms, following the introduction of mandatory CSR under the Companies Act, 2013. It explores whether CSR contributes to firm profitability and efficiency, with a focus on Return on Assets (ROA), Return on Equity (ROE), and Profit After Tax (PAT).
An explanatory research design was adopted using secondary data for the period of 10 years (FY 2014-15 to 2023-24). Pool Regression analysis was employed to examine the relationship between CSR spending and firm-level financial performance indicators.
Results show a significant positive relationship between CSR spending and PAT, suggesting that CSR investments enhance long-term profitability. However, the effects on ROA and ROE are negative and statistically insignificant, indicating that CSR may not immediately improve short-term accounting returns.
The findings emphasize the importance of sustained CSR investment as a strategic tool for enhancing firm profitability. Policymakers are encouraged to continue supporting mandatory CSR provisions, while managers should recognize CSR as an investment in long-term value creation rather than short-term efficiency gains.
This study advances the CSR–financial performance debate by providing evidence from India’s mandatory CSR based on actual CSR spending, rather than content analysis. Unlike prior industry-specific studies, it spans multiple sectors and uses a decade of post-mandate data, showing how CSR builds reputational capital and stakeholder trust, translating into long-term financial benefits.
