Accounting Metrics of CSR Spending of Selected NSE 200 Companies

Abstract

In India, as per the new Companies act 2013, which came into force on 1st April 2014 makes it mandatory for companies with a net worth of more than Rs. 500 crores, or turnover of Rs. 1,000 crores, to adopt a CSR policy under the Sec.135 of the act. According to this Act, companies with a minimum net worth of Rs.500 crores, turnover of Rs.1000 crore or net profit of Rs.5 crore or more are required to spend at least two percent of their three-year average annual net profit on social welfare initiatives. After the enforcement of the companies’ act 2013, a lot of researchers are coming with a different opinion about the CSR spending and its impact on the performance of the companies. Therefore, in this article, we try to study the impact of CSR spending on the net profit of the NSE 200 companies. For that analysis, we split the 200 companies from 6 different industries. For which we run the pooled OLS regression model to check the impact of CSR spending on Net profit keeping others factors constant. The result shows that there is an impact on CSR spending on the Net profit of the companies.

Keywords: CSR spending, NSE 200, Net Profit, Companies act 2013