Financial Performance of Socially Responsible Firms: A Comparative Study of MNCs and Non-MNCs

LBS Journal of Management and Research, Forthcoming

20 Pages Posted: 6 Dec 2015 Last revised: 13 Sep 2016

See all articles by Akshita Arora

Akshita Arora

BML Munjal University

Tarun Kumar Soni

Fore School of Management; NITI Aayog

Date Written: 2015

Abstract

The relationship between CSR and firm performance has been widely studied in the context of developed nations; however, empirical work on this issue is limited in case of developing nations like India. In this paper, we test the relationship between corporate social responsibility and different firm characteristics for MNC and Non-MNC Indian firms. We have tried to make a comparison between MNCs and Non-MNCs in their CSR activities. The empirical analysis was conducted using different parametric and non-parametric estimation techniques. The results show that CSR does not have significant relationship with firm performance measures of the sampled firms. These results are contradictory to the accumulating body of empirical studies which support positive impact of CSR on financial performance. Further, the results indicate positive relationship of CSR with size but negative relation with leverage and firm age confirming that larger, younger and less levered firms are highly active towards CSR in India than their counterparts.

Keywords: Corporate Social Responsibility, Multinational Corporations, Firm Performance, Firm Size

Suggested Citation

Arora, Akshita and Soni, Tarun Kumar, Financial Performance of Socially Responsible Firms: A Comparative Study of MNCs and Non-MNCs (2015). LBS Journal of Management and Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2699429

Akshita Arora (Contact Author)

BML Munjal University ( email )

National Highway 8
67 KM Milestone
Gurgaon
India

Tarun Kumar Soni

Fore School of Management ( email )

New Delhi
India

NITI Aayog ( email )

NITI Aayog
New Delhi, 100018
India

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