Does Blockholders’ Concentration Influence Spending on Corporate Social Responsibility? - Evidence from the Indian Firms

Abstract

This study investigates the relationship between blockholder concentration and corporate social responsibility (CSR) spending in Indian firms, using stakeholder identification and salience theory. This study aims to fill a gap in the literature by examining how the concentration of blockholders, particularly external Blockholders and promoters, influences CSR activities. The analysis covers 1,918 firms from 2014 to 2023, using data from the Centre for Monitoring Indian Economy (CMIE) database. Empirical methods, including four regression models, are employed to examine the significance of blockholder attributes on CSR spending. The results demonstrate the significant positive impact of blockholder concentration on CSR activities. Specifically, the influence of external blockholders on CSR spending is greater than that of promoters. Furthermore, the study finds that single promoters with large investments are more inclined towards CSR spending, while interest in CSR diminishes when multiple promoters hold significant shares. This study uniquely contributes to the literature by providing an insightful analysis of blockholder concentration's impact on CSR, highlighting the differential effects between external blockholders and promoters, and underscoring the importance of strategic blockholder alliances in enhancing CSR efforts. These findings offer valuable insights for corporate managers and policymakers in emerging economies such as India.

Keywords

• blockholder
• concentration
• CSR spending
• stakeholder salience
• group firms