Demystifying relationship between Corporate Social Responsibility (CSR) and financial performance: An Indian business perspective

Corporate Social Responsibility (CSR) is a desirable approach considering it reduces risks, increases brand value, improves transparency, and has a possible impact on the financial health of the business. Initiated as an act of philanthropy, it has recently become mandatory as a part of the Companies Act, 2013 in India which mandates CSR spending. The study had an objective to validate that CSR disclosures lead to better financial performance of a company and vice-versa. The study analyzed the relationship between CSR disclosure and financial performance and vice versa using various approaches viz., exploratory to understand the trends and practices and statistical by adopting multiple regression modelling techniques. The results of the study reveal that the company’s financial performance (profitability) has a cause and effect relationship with the CSR disclosure and vice versa, which substantiated the theories predicting that CSR can affect the financial performance of the company