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

Abstract

This study investigates the relationship between blockholder concentrationand corporate social responsibility (CSR) spending in Indian firms, using stakeholderidentification and salience theory. This study aims to fill a gap in the literature byexamining how the concentration of blockholders, particularly external Blockholdersand promoters, influences CSR activities. The analysis covers 1,918 firms from 2014to 2023, using data from the Centre for Monitoring Indian Economy (CMIE) database. Empirical methods, including four regression models, are employed to examine the significanceof blockholder attributes on CSR spending. The results demonstrate the significantpositive impact of blockholder concentration on CSR activities. Specifically, theinfluence of external blockholders on CSR spending is greater than that of promoters. Furthermore, the study finds that single promoters with large investments are more inclinedtowards CSR spending, while interest in CSR diminishes when multiple promotershold significant shares. This study uniquely contributes to the literature by providingan insightful analysis of blockholder concentration’s impact on CSR, highlighting the differential effects between external blockholders and promoters, and underscoringthe importance of strategic blockholder alliances in enhancing CSR efforts. Thesefindings offer valuable insights for corporate managers and policymakers in emergingeconomies such as India.