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Corporate Social Responsibility and Firm Financial Performance: A Moderating Effect of Economic Policy Uncertainty
  • Jadhav Chakradhar,
  • Ritika Gupta
Jadhav Chakradhar
Centre for Economic and Social Studies

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Ritika Gupta
Rukmini Devi Institute of Advanced Studies
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Assessing the impact of CSR has recently gained momentum over the world. Most related literature examines how CSR investments affect financial performance without considering the nexus under commonly uncertain times. The study uses Indian data to extend the nascent literature on CSR and EPU by examining the impact of CSR on firm financial performance during commonly uncertain times. The Panel-Corrected Standard Error econometric technique has been employed to explore the influence of CSR on ROE across ten years for NIFTY 100 firms. Besides, System GMM estimation has been used to deal with the endogeneity bias. Evidence suggests that during ordinarily uncertain periods, CSR investments act as a social capital reservoir and improve firm financial performance. Moreover, the results show that the positive influence of CSR during times of uncertainty is greater for firms belonging to high visibility and more sensitive sectors. These novel findings would help corporate policymakers, individual investors, and managers to better understand and minimize the losses due to uncertainty. Keywords: CSR, firm financial performance, Economic policy uncertainty, System GMM, ROE JEL Codes: G34, G30, D80