Director Expertise and Compliance to Corporate Social Responsibility Regulations

51 Pages Posted: 19 Feb 2021 Last revised: 2 Jul 2021

See all articles by Swarnodeep HomRoy

Swarnodeep HomRoy

University of Groningen

Wentao Li

University of Groningen

Nassima Selmane

University of Groningen

Date Written: December 5, 2020

Abstract

We study compliance of Indian firms to the 2013 Corporate Social Responsibility (CSR) regulation that mandates qualifying firms to spend 2 percent of the pre-tax profits on CSR. We demonstrate that the formation of CSR committees and the appointment of directors with relevant experience (CSR-Directors) increase compliance to the CSR law by 11 percent. Further, we show that CSR-Directors improves compliance by implementing a cost-effective CSR strategy by reducing the number and geographic spread of CSR projects. CSR directors are more likely to implement a cost-effective CSR strategy for companies in more competitive industries, companies with high debt, and companies with no previous history of CSR. Companies with higher CSR compliance gain in value and have increased creditworthiness.

Keywords: Director Expertise, CSR Committees, CSR Law, CSR Strategy

JEL Classification: G34, G39, L14, L25, Q50

Suggested Citation

HomRoy, Swarnodeep and Li, Wentao and Selmane, Nassima, Director Expertise and Compliance to Corporate Social Responsibility Regulations (December 5, 2020). Available at SSRN: https://ssrn.com/abstract=3743453 or http://dx.doi.org/10.2139/ssrn.3743453

Swarnodeep HomRoy (Contact Author)

University of Groningen ( email )

Nettlebosje 2
Department of Economics, Econometrics and Finance
Groningen, Groningen 9747 AE
Netherlands

Wentao Li

University of Groningen ( email )

Postbus 72
9700 AB Groningen
Netherlands

Nassima Selmane

University of Groningen

Postbus 72
9700 AB Groningen
Netherlands

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
228
Abstract Views
962
rank
190,582
PlumX Metrics