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Research Article Open access CC BY 4.0

Investigating the Relationship between Corporate Social Responsibility and Financial Performance: A Case Study on Indian Manufacturing Companies

Suprabha L, Greeshma H, Sabira A

South Asian Journal of Social Studies and Economics · pp. 102–108 · Published 4 Dec 2024

10.9734/sajsse/2024/v21i12921

Abstract

This study investigates the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP) in the context of Indian manufacturing firms. Using secondary data from 150 firms listed in the Nifty 500 index over six years (2014–2019), the study employs multivariate regression analysis to examine both accounting-based (ROA) and market-based (Tobin's Q) performance measures. The results reveal a significant positive association between CSR activities and CFP, highlighting that CSR initiatives enhance profitability and market valuation. Variance inflation factor and stationarity tests confirm the robustness of the models, with R-squared values indicating that independent variables explain 66–67% of the variation in financial performance. The findings underscore the strategic importance of CSR in improving economic outcomes and guiding managerial decisions. While limited to Indian manufacturing firms, the study provides a foundation for further research in cross-country and sectoral comparisons.

CSR Corporate financial performance multivariate analysis firm size manufacturing sector

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