Corporate Governance and Corporate Social Responsibility

57 Pages Posted: 19 Feb 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 how corporate governance affects corporate social responsibility (CSR) using the 2013 CSR regulation in India that mandates qualifying firms to spend 2 percent of the pre-tax profits on CSR. Controlling for the endogeneous association of corporate governance and CSR choices, we demonstrate that the formation of CSR committees and appointment of directors with relevant experience (CSR-Directors) increases the compliance to the CSR law by 11 percent. Further, we show that CSR-Directors affect compliance by reducing the cost of compliance. This effect is larger for companies in more competitive industries, companies with higher 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, Corporate Governance and Corporate Social Responsibility (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
76
Abstract Views
346
rank
368,696
PlumX Metrics