CSR disclosures and profit persistence: evidence from India

Abstract

PurposeThe purpose of the present study is to analyze the impact of corporate social responsibility (CSR) disclosures on firms' profitability and its persistence.Design/methodology/approachThe study has been conducted for listed firms operating in India from 2008 to 2017. Content analysis has been utilized to estimate the CSR disclosures score. Further, dynamic panel regression has been utilized to estimate the relationship between CSR disclosures and profit persistence.FindingsThe results confirm positive profit persistence for Indian companies. The results further show that different dimensions of CSR disclosure have differential impact on firms' profitability. CSR dimensions concerning total community development and product-related disclosures have a positive relationship, whereas dimensions related to environmental and customer-related disclosures have a negative relationship with financial performance. The results also indicate that CSR disclosures are significantly related to profit persistence.Originality/valueThe study is first of its kind that analyzes the impact of CSR disclosure on profit persistence for Indian companies. The results can provide useful implications for managers and regulators in terms of formulation of overall CSR policies.