The Role of Information Asymmetry in CSR: An Investigation

Posted: 14 Sep 2016 Last revised: 4 Jul 2017

Date Written: February 26, 2016

Abstract

Corporate Social Responsibility (CSR), as a concept, has been the focus of research and deliberation over the past few years. In fact, few themes in management arouse as much controversy and contestation as CSR. CSR captures a spectrum of values and criteria for measuring a company’s contribution to social development. Concepts such as corporate citizenship, business ethics, stakeholder management and sustainability have emerged and are used interchangeably. While some see this as a management trend, others view it as a framework of ‘soft regulation’ that places new demands on corporations, yet others present it as a way for corporate actors to assist in social and economic development (Sahlin-Andersson, 2006). What exactly these developments in the CSR ‘movement’ mean, remains open to debate. The basic questions at the heart of CSR are as old as business itself, what is a business for and what contribution does it make to society (Handy, 2002)? Empirical researchers have been unable to agree on the answer to the one question that has dominated CSR research more than any other over the past 30 years, which is whether CSR is good for business or not. Thus, a subject that even its proponents regard as, ‘that most naïve of concepts’ (Mintzberg, 1983), and which its critics acknowledge ‘has won the battle of ideas’ (Crook, 2005), has become a major area of research despite a degree of ambiguity and disagreement that might ordinarily be expected to lead to its demise (Hirsh and Levin, 1999). The proposed study attempts to take a step further and investigate the relationship between asymmetric information and CSR. The study assumes significance in the wake of India replacing its 57 year old Companies Act 1956 with the Companies Act 2013 which has incorporated new provisions related to CSR, governance, compliance and enforcement, e-management, mergers and acquisitions, making India the first country to mandate spending on CSR activities through a statutory provision. The study has wider policy implications in terms of accountability of corporations, regulatory monitoring, litigation and conflict resolution.

Keywords: CSR, Information Asymmetry, India

JEL Classification: D82, G14

Suggested Citation

Kuriakose, Francis, The Role of Information Asymmetry in CSR: An Investigation (February 26, 2016). Available at SSRN: https://ssrn.com/abstract=2838224

Francis Kuriakose (Contact Author)

Erasmus University Rotterdam ( email )

Burgemeester Oudlaan 50
Rotterdam, 3062
Netherlands

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