The impact of excess CSR expenditure on firm value and dividend payout in India: an analysis using firm age and size dynamics

IF 1.9 Q2 ECONOMICS INTERNATIONAL JOURNAL OF SOCIAL ECONOMICS Pub Date : 2024-09-05 DOI:10.1108/ijse-02-2024-0136

Navin Chettri, Leo Themjung Makan

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Abstract

Purpose

The paper looks at the impact of excess amount of CSR expenditure (CSRE) in relation to mandatory CSRE in an Indian context on dividend payout (DP) and firm value (FV) where CSRE is mandatory, as well as how this relationship varies between firms based on their age and size.

Design/methodology/approach

A sample of the 657 companies listed on the National Stock Exchange (NSE) from 2014–15 to 2020–21 is used in the study, for which spending on CSR was mandatory. A two-step generalised method of the moment is employed to examine the relationship between the variables of interest.

Findings

The results show that excess CSREs neither increase the firm’s valuation nor benefit shareholders' economic benefits, i.e. dividend distribution. However, a deeper analysis reveals that excess CSRE is positively associated with FV in the case of smaller firms and also positively corresponds with DP in the case of younger firms.

Originality/value

The present study explicitly considers the excess CSR spending beyond the mandated requirements. It investigates whether such spending contributes to firms improving their valuation and explores its connection to DPs.

Peer review

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-02-2024-0136

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印度企业社会责任超额支出对公司价值和股息支付的影响：利用公司年龄和规模动态进行的分析

目的本文研究了印度企业社会责任支出（CSRE）超额与强制性 CSRE 相比，对强制性 CSRE 的股息支付（DP）和公司价值（FV）的影响，以及这种关系在不同公司之间如何因其年龄和规模而有所不同。研究结果表明，超额 CSRE 既不会提高公司估值，也不会使股东的经济利益（即股利分配）受益。然而，深入分析显示，对于规模较小的公司而言，超额 CSRE 与 FV 呈正相关，对于规模较小的公司而言，超额 CSRE 与 DP 呈正相关。本研究明确考虑了超出法定要求的超额企业社会责任支出，调查了此类支出是否有助于企业提高估值，并探讨了其与DP之间的联系。同行评议本文的同行评议历史可在以下网址查阅：https://publons.com/publon/10.1108/IJSE-02-2024-0136。

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来源期刊

INTERNATIONAL JOURNAL OF SOCIAL ECONOMICS ECONOMICS-

CiteScore

3.20

自引率

5.30%

发文量

期刊介绍： The International Journal of Social Economics publishes original and peer-reviewed theoretical and empirical research in the field of social economics. Its focus is on the examination and analysis of the interaction between economic activity, individuals and communities. Social economics focuses on the relationship between social action and economies, and examines how social and ethical norms influence the behaviour of economic agents. It is inescapably normative and focuses on needs, rather than wants or preferences, and considers the wellbeing of individuals in communities: it accepts the possibility of a common good rather than conceiving of communities as merely aggregates of individual preferences and the problems of economics as coordinating those preferences. Therefore, contributions are invited which analyse and discuss well-being, welfare, the nature of the good society, governance and social policy, social and economic justice, social and individual economic motivation, and the associated normative and ethical implications of these as they express themselves in, for example, issues concerning the environment, labour and work, education, the role of families and women, inequality and poverty, health and human development.