CSR Spending and Financial Performance: A Cross-Sectoral Panel Study, An Empirical Analysis of Selected Indian Corporations

Abstract: This study has considered a set of eight listed firms in three different stock exchanges (Banking, Energy and Pharmaceuticals) for a five year period from 2020 to 2025, creating 40 observations of firm years to study the relationship between firm financial performance and CSR expenditure. Using compulsory CSR disclosures under Section 135 of the Companies Act, 2013, descriptive statistics, Pearson and Spearman correlation analysis, Ordinary Least Squares (OLS) and log-log regression models, one-way ANOVA, Kruskal-Wallis non-parametric testing and CAGR estimation are used in this paper to interrogate the profit-CSR nexus across sectors. The net profit and absolute CSR expenditure are found to be strongly related and statistically significant with the Pearson correlation coefficient of 0.9584, Spearman rho of 0.9859, and p value < 0.001, which means that 97.36% of the variance in CSR expenditure can be explained by the log- log regression model. The mean CSR expenditure as a proportion of net profit for all the firms is 2.03% (SD = 0.41%) which is slightly above the statutory requirement of 2%. A sector-wise analysis shows that there are large differences in the intensity of CSR activity, the Energy sector has the highest CV (21–53%), and the Pharma sector has the greatest stability in compliance (CV < 3%). Results of Kruskal-Wallis test show statistically significant differences between the sectors in relation to CSR intensity (H = 6.484, p = 0.039). The implications of these findings for policymakers, investors and ESG analysts to understand the impact of India's mandatory CSR framework on the behaviour of corporate social investment are significant.

Keywords: Corporate Social Responsibility, CSR compliance, net profit, Indian corporates, panel data, quantitative analysis, ESG.