CSR SPENDING IN INDIA: EXPLORING THE LINKAGES WITH BUSINESS GROUP AFFILIATION AND PRODUCT PORTFOLIO DIVERSIFICATION
The present study aims to examine the influences of group affiliations status on the CSR spending of a firm and also to test how the group size and interaction of group size and product portfolio diversification influences the CSR spending. The sample of the present study covers 1,513 Indian firms coming under the ambit of CSR reporting, represented through the unbalanced panel data set of 4,459 firm-years from the year 2014 to 2019. The baseline model regresses CSR spending on the group affiliation status and set of controlling variables which are having the impact on CSR spending by using panel least squares regression model. The baseline model is extended to test the impact of group size and interaction of group size and product portfolio diversification on the CSR spending. Industry variations with regard to CSR spending are controlled by introducing industry fixed effects into the regression model. The findings of the study reveal significant positive impact of group affiliation status on CSR spending. The results are also robust to the group size effect and the interaction effect of group size and product portfolio diversification. The findings are supporting stewardship theory and socio—emotional wealth creation view of the group affiliated firm which asserts that group affirms experience variety of stakeholder demands and social issues. Building social reputation through CSR activities will be helpful in handling such situations. The findings also proved that larger group firms with wider product diversification are more encouraged towards CSR spending. This is the first study which tests the impact of group size and also the interaction of group size and product portfolio diversification on CSR spending. The study contributes to the literature on how the ownership style, especially, group affiliation status, influences the social engagement of a firm
Copyright (c) 2022 Srikanth Potharla, Hiranya Dissanayake, Balachandram Amirishetty
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Authors submitting articles for publication warrant that the work is not an infringement of any existing copyright and will indemnify the publisher against any breach of such warranty. By publishing in Applied Finance Letters, the author(s) retain copyright but agree to the dissemination of their work through Applied Finance Letters.
By publishing in Applied Finance Letters, the authors grant the Journal a Creative Commons nonexclusive worldwide license (CC-BY-NC-ND: Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License) for electronic dissemination of the article via the Internet, and, a nonexclusive right to license others to reproduce, republish, transmit, and distribute the content of the journal. The authors grant the Journal the right to transfer content (without changing it), to any medium or format necessary for the purpose of preservation.
Authors agree that the Journal will not be liable for any damages, costs, or losses whatsoever arising in any circumstances from its services, including damages arising from the breakdown of technology and difficulties with access.