Corporate Social Responsibility & Shareholder Returns - Evidence from the Indian Capital Market

Abstract

The primary aim of this paper is to empirically examine the relative performance of the portfolio of sociallyscreened stocks in the Indian capital market. Using data on Environmental, Social and Governance (ESG) index (‘S&P ESG India Index’) and market index (‘S&P CNX 500 Index’) for the sample period January 2005-September 2008, this empirical study has inferred that the portfolio of stocks of socially responsible companies has not underperformed the market. Rather, as against the market, there are signals of positive excess return, though statistically not significant, for the shareholders of the socially responsible companies. Also, results of shareholder returns for the socially responsible companies are comparable with those observed for the ‘Nifty’ Portfolio (‘S&P CNX Nifty Index’). These research findings have implications for sociallyresponsible investment decisions made by both the (activist) investors and corporate management. Keywords : Indian Capital market, stakeholder returns, Corporate social responsibility

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