Corporate Social Responsibility Disclosure and Financial Performance: Evidence from BSE-Listed Companies in Punjab and Haryana

Abstract

Purpose: Corporate Social Responsibility disclosure has evolved from a voluntary, largely cosmetic exercise into a legally mandated, strategically consequential dimension of corporate governance in India following the Companies Act 2013. Section 135 of the Act, effective from FY 2014-15, requires all companies meeting prescribed thresholds of net worth, turnover, or net profit to spend at least 2% of their average three-year net profit on CSR activities and to disclose these activities in their annual reports. Nearly a decade after this mandate came into force, the empirical question of whether CSR disclosure is associated with superior financial performance — whether doing good and doing well are complementary rather than competing corporate objectives — remains contested in the Indian context. This paper examines that relationship specifically for BSE-listed companies headquartered in Punjab and Haryana.
Design/Methodology/Approach: The study is based entirely on secondary data collected from annual reports, the MCA21 company database, and the BSE corporate disclosure portal for a balanced panel of 40 companies headquartered in Punjab or Haryana and continuously listed on the BSE over the nine-year period FY 2015-16 to FY 2023-24, yielding 360 firm-year observations. CSR disclosure quality is measured through a self-constructed 25-item content analysis index applied to each company's annual report CSR section. Financial performance is measured through three indicators: Return on Assets (ROA), Return on Equity (ROE), and Tobin's Q. Panel regression with fixed effects, selected via the Hausman specification test, is the primary analytical method, supplemented by Pearson correlation and descriptive trend analysis.
Findings: CSR disclosure quality is positively and significantly associated with ROA (β = 0.214, p < 0.001) and ROE (β = 0.187, p < 0.001), but the relationship with Tobin's Q — the market-based performance measure — is weaker and significant only at the 10% level, suggesting that investors in this regional context have not yet fully priced CSR disclosure quality into equity valuations. Firm size and leverage are significant control variables. A one-year lagged specification confirms that the CSR disclosure-performance relationship holds over time, supporting a causal rather than merely contemporaneous association. Sector differences were observed: manufacturing firms show stronger CSR-performance effects than service sector firms in the sample.
Originality/Value: This paper provides a geographically specific, longitudinal empirical contribution to the Indian CSR-performance literature by focusing on Punjab and Haryana-headquartered companies — a regional corporate landscape characterised by dominant agro-processing, textiles, pharmaceuticals, and engineering industries that has not previously been studied as a distinct CSR-performance context.

Keywords