The Value Relevance of Corporate Social Responsibility (CSR) Expenditure: Evidence from Regulatory Decisions

Abacus, 56(4): 455-494, 2020

57 Pages Posted: 4 Mar 2021

See all articles by Sudipta Bose

Sudipta Bose

Discipline of Accounting and Finance, Newcastle Business School, The University of Newcastle, Sydney, Australia

Amitav Saha

School of Business, The University of Notre Dame Australia

Indra Abeysekera

affiliation not provided to SSRN

Date Written: December 16, 2020

Abstract

We examine the value relevance of the corporate social responsibility (CSR) expenditure of Bangladeshi banks from 2007–2014 in response to a regulatory directive on banking firms’ engagement in CSR activities. We find a positive association between CSR expenditure and a firm’s market value. Evidence of an inverse U-shaped curvilinear association between CSR expenditure and market value suggests that the impact of CSR expenditure on a firm’s market value has a certain limit. We also document that unexpected or abnormal components of CSR expenditure comprise value-relevant information. Our study provides empirical evidence to support the value relevance of CSR expenditure as an explanation for why firms should invest in CSR and why they should inform various stakeholders about their CSR activities.

Keywords: CSR expenditure, value relevance, banking industry, abnormal CSR expenditure, emerging economy

JEL Classification: G21, M14, M41, M48

Suggested Citation

Bose, Sudipta and Saha, Amitav and Abeysekera, Indra, The Value Relevance of Corporate Social Responsibility (CSR) Expenditure: Evidence from Regulatory Decisions (December 16, 2020). Abacus, 56(4): 455-494, 2020, Available at SSRN: https://ssrn.com/abstract=3749989

Sudipta Bose (Contact Author)

Discipline of Accounting and Finance, Newcastle Business School, The University of Newcastle, Sydney, Australia ( email )

Sydney
Australia

HOME PAGE: http://www.newcastle.edu.au/profile/sudipta-bose

Amitav Saha

School of Business, The University of Notre Dame Australia ( email )

Sydney
Sydney, NSW 2000
Australia

Indra Abeysekera

affiliation not provided to SSRN ( email )

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

Paper statistics

Downloads
12
Abstract Views
131
PlumX Metrics