<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>This paper examines the impact of corporate social responsibility (CSR) expenditure compliance on firm value in the context of the Indian firms by applying instrumental approach of the stakeholder theory and the P/B-ROE valuation model. The study hypothesizes that CSR expenditure compliance will positively affect the firm value. Price-to-book (P/B) ratio of the firm is used as a proxy of the firm value. The sample of firms is selected from NSE-500 Index companies for the period of five years from 2014-15 to 2018-19 and the method adopted is a portfolio grouping approach to form a cross-sectional portfolio regression model. The results reveal that CSR expenditure compliance negatively influences firm value. Thus, instrumental approach which hypothesizes that CSR initiatives improve firm performance is not supported. However, to form a cross-sectional portfolio regression model by using portfolio grouping approach is found to be more appropriate than the individual cross-sectional regression model.</p>
</abstract>

This paper examines the impact of corporate social responsibility (CSR) expenditure compliance on firm value in the context of the Indian firms by applying instrumental approach of the stakeholder theory and the P/B-ROE valuation model. The study hypothesizes that CSR expenditure compliance will positively affect the firm value. Price-to-book (P/B) ratio of the firm is used as a proxy of the firm value. The sample of firms is selected from NSE-500 Index companies for the period of five years from 2014-15 to 2018-19 and the method adopted is a portfolio grouping approach to form a cross-sectional portfolio regression model. The results reveal that CSR expenditure compliance negatively influences firm value. Thus, instrumental approach which hypothesizes that CSR initiatives improve firm performance is not supported. However, to form a cross-sectional portfolio regression model by using portfolio grouping approach is found to be more appropriate than the individual cross-sectional regression model.

Impact of CSR Expenditure Compliance on Firm Value Using P/B-Roe Valuation Model and Instrumental Approach

Studies in Business and Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

This paper examines the impact of corporate social responsibility (CSR) expenditure compliance on firm value in the context of the Indian firms by applying...

Impact of CSR Expenditure Compliance on Firm Value Using P/B-Roe Valuation Model and Instrumental Approach

Published Online: Oct 08, 2022

Page range: 108 - 123

DOI: https://doi.org/10.2478/sbe-2022-0028

Keywords
CSR, PB-ROE, portfolio grouping, firm value, stakeholder theory

© 2022 Pradeep Kumar Gupta et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Impact of CSR Expenditure Compliance on Firm Value Using P/B-Roe Valuation Model and Instrumental Approach

Published Online: Oct 08, 2022

Page range: 108 - 123

DOI: https://doi.org/10.2478/sbe-2022-0028

KeywordsCSR, PB-ROE, portfolio grouping, firm value, stakeholder theory

© 2022 Pradeep Kumar Gupta et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
CSR, PB-ROE, portfolio grouping, firm value, stakeholder theory