Empirical Investigation of Relationship Between CSR and Financial Performance: Study of Tata Companies

Abstract

Purpose: This study examines how corporate social responsibility (CSR) affects Tata enterprises’ financial performance. Numerous studies have examined how CSR affects company FP, with mixed results. The large variety of outcomes may have been due to erroneous analysis or insignificantly controlled variables, but the most likely explanation is that different research utilised different approaches. This study examines the relationship between CSR and financial performance in India using Tata Group companies listed on the BSE100.

Methodology: The BSE100-listed Tata companies were chosen for investigation because Tata's are pioneer in philanthropy and CSR. The present investigation relies on data obtained from annual reports and sustainability reports of the respective companies for a period of 10 years (2013–2022). Regression analysis was performed using Stata version 14 to evaluate the relationship between CSR spending and financial performance.

Research limitation: The study is confined to 7 Tata companies indexed in the BSE100 for 10 years (FY2013–FY2022).

Social implication: Tata companies’ ethics and philanthropy activities are landmarks in Indian society that can be used to motivate the business stakeholders to contribute more to CSR. The tourism companies can use Tata's CSR model to grow their financial performance.

Findings: The findings of the study depict that financial performance is positively impacted by the amount spent on CSR by the companies. Companies that invest more in CSR have higher profitability, ROA, ROE, EPS, MB Ratio and MR_Daily.

Originality: This chapter will add comprehensive knowledge about the relationship of CSR and financial performance.

Citation

Singh, P.K., Gupta, D., Kumar, R., Sunder, R.G. and Das, B.K. (2024), "Empirical Investigation of Relationship Between CSR and Financial Performance: Study of Tata Companies", Shaikh, E. and Singh, K. (Ed.) Corporate Social Responsibility, Corporate Governance and Business Ethics in Tourism Management: A Business Strategy for Sustainable Organizational Performance, Emerald Publishing Limited, Leeds, pp. 119-135. https://doi.org/10.1108/978-1-83608-704-520241009