Corporate social responsibility and financial performance: evidence from top CSR-spending companies in India

Purpose The study examines the impact of Corporate Social Responsibility (CSR) spending on financial performance among India’s top CSR-spending firms, following the introduction of mandatory CSR under the Companies Act, 2013. It explores whether CSR contributes to firm profitability and efficiency, with a focus on Return on Assets (ROA), Return on Equity (ROE), and Profit After Tax (PAT). Design/methodology/approach An explanatory research design was adopted using secondary data for the period of 10 years (FY 2014-15 to 2023-24). Pool Regression analysis was employed to examine the relationship between CSR spending and firm-level financial performance indicators. Findings Results show a significant positive relationship between CSR spending and PAT, suggesting that CSR investments enhance long-term profitability. However, the effects on ROA and ROE are negative and statistically insignificant, indicating that CSR may not immediately improve short-term accounting returns. Practical implications The findings emphasize the importance of sustained CSR investment as a strategic tool for enhancing firm profitability. Policymakers are encouraged to continue supporting mandatory CSR provisions, while managers should recognize CSR as an investment in long-term value creation rather than short-term efficiency gains. Originality/value This study advances the CSR–financial performance debate by providing evidence from India’s mandatory CSR based on actual CSR spending, rather than content analysis. Unlike prior industry-specific studies, it spans multiple sectors and uses a decade of post-mandate data, showing how CSR builds reputational capital and stakeholder trust, translating into long-term financial benefits.