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SYNOPSIS

TOPIC- OWNERSHIP STRUCTURE AND CORPORATE SOCIAL


RESPONSIBILITY OF BSE (Bombay Stock Exchange) LISTED COMPANIES

By
Domain – Finance

OWNERSHIP STRUCTURE AND CORPORATE SOCIAL


RESPONSIBILITY OF BSE (Bombay Stock Exchange) Listed Companies
INTRODUCTION
Corporate Social Responsibility is a self-regulating business model that helps a company be
socially accountable – to itself, its stakeholders and the public. By practicing corporate social
responsibility, also called corporate citizenship, companies can conscious of the kind of impact
they are having on all society, including economic, social and environmental. Through CSR
programs, philanthropy and volunteer efforts, business can benefit the society while boosting
their brands. India is the first country in the world to make CSR activities mandatory following
by the amendment in the Companies Act, 2013 in April, 2014. As per the rule, the companies
having a net worth of INR 500 crore or more or an annual turnover of INR 1000 crore or having
a net profit of INR 5 crore, is required to spend 2 percent of their average net profits of 3 years
on CSR. Ownership structure is concerned with the internal organization of a business entity
and the rights and duties of the individuals holding a legal or equitable interest in that business.
They could be either sole proprietorship, partnership or a corporation. Though CSR is
mandatory in India, some companies don’t disclose all activities or they do more philanthropy
work so that they can earn a good brand image or simply because they care for the human
society at large.
Here, the independent variables that can be controlled or changed is Company Size, Ownership
Concentration, Profitability and Industry. All the 4 independent variables are essential parts of
ownership structure. The dependent variable chosen for this project is Corporate Social
Responsibility. So we will try to understand how the 3 variables are influencing the Corporate
Social Responsibility of a company.
LITERATURE REVIEW
The corporate governance mechanism vary from organization to organization. The
instrumental stakeholders suggests that CSR affects positively the well-being of firms
(Donaldson T, 1995). It suggests that CSR positively affects the firm through a variety of
stakeholders such as shareholders, creditors, employees, customers, regulators etc. As per
Coleman in 2007, he derived that bigger the size of the board then it enhances corporate
governance. In a study made by Caroll (1998) on top 500 largest Indian companies, he found
that 49% of the companies mention about CSR in their annual reports. Most of the companies
speak about donations, renovating schools, mid-day meals etc. As per D.Y.Chacharkar
A.V.Shukla (2004), tried to theoretically demonstrate the benefits of CSR through the iceberg
effect diagram. He said like the iceberg the recognition and appraisal was the visible part and
most of the philanthropic activities remain invisible in the form of publicity, image building,
expansion of customer base and profit.
NEED FOR THE STUDY
The need for the study is to understand how the ownership structure has an effect on the
corporate social responsibility. This study will also enable to understand if the corporate social
responsibility has a positive effect on the firm and also increases the stakeholder value for the
firm. With the investment of some organization in CSR activities, it is able to hide unfavorable
corporate behaviors. With this research we will be able to analyze the different ownership
structures that constitutes the organization and if they are involved and promotes the CSR
activities of the organization. Also, it will be also understood that if they are also benefitting
from the CSR activities like activities done on social platform. On analysis of the data, we can
also try to understand if the CSR activities actually increases the brand image and the
stakeholder value of the firm.
RESEARCH QUESTIONS
The research questions that will be answered are:
1. Which aspects of CSR are mostly disclosed in Indian annual reports?
2. Is there any relationship between ownership structure and CSR disclosure in Indian
company’s annual reports?
OBJECTIVES
The main objective of the study is to examine the influence of ownership structure on corporate
social responsibility disclosure in Indian companies’ annual report.
HYPOTHESIS
The hypothesis for this study are:
H1. The extent of CSR disclosure in annual reports is negatively associated with ownership
concentration.
H2: The extent of CSR disclosure in annual reports is positively associated with the
government ownership
H3. The extent of CSR disclosure in annual reports is associated with the company’s company
size, profitability and degree of industry competitiveness.
SCOPE OF THE STUDY
The scope of the study is to understand how the ownership structures are inter-related with the
CSR activities of the firm. The CSR activities create a better brand image for the company and
helps to increase the value of the firm. This study will also enable to understand what attributes
of CSR activities such as social and economic factors will help in creating a better brand value
of the company and the stakeholder value of the firm. Through the study we will be able to
understand the various ownership structures and who is responsible for making the investment
and taking decisions for which types of CSR activities will be beneficial for the firm.
RESEARCH METHODOLOGY
The research methodology used for the dissertation is through a survey. A survey will be
conducted to understand and a number of companies from various fields such as
Petrochemicals, Banks and Cement industries will be chosen. The sample uses annual report
of a company to understand the effects of independent variables and the relationship between
CSR activities. A scorecard will be created to whereby a company will be awarded with 1 if it
mentions an item included in the checklist and will be provided 0 if not. A checklist of 22 items
was taken into consideration where a ratio will be calculated from computing the actual scores
awarded to the maximum scores that is attainable which is 21. The study will use EXCEL and
SPSS to produce and analyze the results.
CHECKLIST
SL CHECKLIST ITEMS IN ANNUAL REPORTS
No.
1 Breakdown of employees by line of business
2 Breakdown of employees by line of qualification/ Executive vs. Non-Executive
3 Employee Appreciation
4 Policy on Training
5 Amount spent on training
6 Number of employees trained
7 Discussion of employees welfare
8 Safety Policy
9 Information on accidents at workplace
10 Statement of Internal Control
11 Value Added Statement
12 Product Safety
13 Environmental Policy
14 Charitable donations/ Sponsorship
15 Participation in government social Campaign
16 Community Programs (health and education)
17 Discussion on major kinds of products/services/projects
18 Improvement in product quality
19 Improvement in customer service
20 Distribution of Marketing network for finished products
21 Customer award/ratings received

References
1. Dr. Mohamed Moustafa Soliman, Dr. Mohamed Bahaa El Din, and Dr. Ahmed Sakr
(2012): “Ownership Structure and Corporate Social Responsibility (CSR): An
Empirical study of the listed companies in Egypt”.
https://doi.org/10.1108/14720700710756535
2. Woo Sung Kim, Kunsu Park and Sang Hoon Lee (2018): “Corporate Social
Responsibility, Ownership Structure, and Firm Value: Evidence from Korea”.
3. Franks, J., & Mayer, C. (1997):” CORPORATE OWNERSHIP AND CONTROL IN
THE U.K., GERMANY, AND FRANCE”. Journal of Applied Corporate Finance, 9(4),
30–45. doi:10.1111/j.1745-6622.1997.tb00622.x
4. Andrei Schleifer and Robert W. Vishny (1997): “A survey on Corporate Governance.”
Journal of Finance 52 (2): 737-783.
5. John R. Nofsinger, Johan Sulaeman, Abhishek Varma (2019):
“Institutional investors and corporate social responsibility” Journal of Corporate
Finance, https://doi.org/10.1016/j.jcorpfin.2019.07.012