How do CSR activities impact firm value?

Synopsis:
Introduction: CSR activities are activities and actions through which a Corporation expresses its responsibility towards the society and community in which it functions. Over the years, many companies have involved themselves in CSR activities. The performance or refrainment of CSR activities has always been a debatable topic, with proponents of these activities arguing about the long term benefits that could be derived from these activities and critics who have always said that these are diversions to the economic objective of a business. CSR activities not only require financial support from the company, but certain CSR activities also require time, dedication and serious involvement of the sponsoring corporation. So when a firm is spending its valuable resources on activities which do not result in any known, immediate, measurable profit, its shareholders might not be happy with the expenses incurred by the company for the same. Hence it is the Managements responsibility to evaluate the benefits that would be derived from a particular CSR activity and convince the shareholders about the same. Issue under Study and Need for the Study: There are different activities through which a corporation can express its social responsibility. Each of them would have different benefits, may be quantitative or qualitative. This research paper aims to evaluate the impact a firms CSR activities have on its overall value, from a financial perspective. The purpose of this research is to analyse whether the impact of CSR activities on firm value is positive (i.e. benefits greater than costs) or negative (i.e. costs greater than benefits). Since different activities have different impact (some immediate and some long term) on firm value, the research would also help determine those CSR activities which would be easily accepted by shareholders and those which would require more convincing skills on part of the Management.

References:
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