Interrelationship aspects

between CSR and Financial

performance:
Study of Indian Cos
Chakka Surya Prakash
BL.BU.P2MBA13014

Introduction

Given the emphasis on the issue of social welfare,

companies today take CSR into account when planning
for future businesses
Increased CSR practices by corporations have also raised
the question being good in business also leads to
good business results
A business case for CSR involves the linkage of social
investments to the economic performance of a firm. In
other words it is the causal link between CSP (corporate
social performance) and CFP (corporate financial
performance)
The relationship is neither simple nor linear
Several studies point towards a a positive relationship
Though there are several studies that it is an important
issue, the search for the relationship remains inconclusive

Review of literature
Author
Year of
Publication,
Title of the
article
Journal/report
where
published

Objectives/majo Variables/metho Findings of the

r issues
dology used
study
discussed in the
article

1. Sanan.N., et al.
(2014), Good
business versus
being good in
business
Relationship
between financial
performance and
CSR in India

To extend the
earlier research
on the
relationship
between CFP and
CSP in the Indian
context.

2. Margolis JD,
Walsh JP. (2003),
Misery loves
companies rethinking
social initiatives by

Using empirical
analysis examines
the inter related
aspects between
CFP and CSP.
Using regression
methods the data
was analyzed.

Used regression
tools to examine
the data set
Examined the
across multiple
universal CSP-CFP countries using

The results of the

study point out
that there is no
significant
relationship
between CSP and
CFP. The link
between the two
is uncertain.
They found the
CSP-CFP link is
not significant

Summary of review
Numerous studies have been carried out to study
this important issue of the link between CSP and
CFP, but the question still remain unanswered
A study by Sanan is recent and focused on Indian
companies, however it is only 30 companies
listed in BSE fom the BSE-30 Index.
Only the financial year 2009-2010 was used for
the study.
Longer period to examine the data could have
been proven.
In addition larger data set could also have been
taken

Objectives
Purpose of this study is to empirically examine
the inter related aspects of CSP and CFP among
500 Indian companies listed in the BSE 500
Index. The corporate annual reports for the
financial years from 2011 through 2013 are used
as main source
The assessment parameters are also beyond the
ones used in prior studies
The study is unique since it is applied to the
Indian context using BSE 500 companies and
larger data set across 3 years

Data source
A sample study of 500 companies (BSE 500)
listed on Bombay Stock Exchange (BSE) is
selected for the year 2013-2014, 2012-2013 and
2011-2012
Secondary data source is used as a main source
Atleast 20+ assessment parameters are used to
measure the linkage

Research Methodology

The study focuses on the companies in the BSE 500 because of

easy accessibility of annual reports and reliability of data
pertaining to their performance
BSE 500 is chosen since it is well established
Annual reports are assessed from the companies official website.
The CSP score is based on the the information provided by the
firm in their annual reports.
The annual reports are carefully examined individually
This research will study 2 models. One with CSP as an
independent variable and another in which CSP as an
dependent variable.
This study assumes the independent variable has been lagged by
1 year between the CSP and CFP impact
The study conducted inferential statistical analysis using SPSS for
hypothesis testing

Possible Limitations
Other factors and parameters could have an
influence on the CSP, but these factors were not
examined due to non-availability of data
The CSP-CFP research is nascent in India and
hence the linkage is uncertain
It is important to extend this study over a longer
study period to examine the trajectory of this
relationship

Thank You