Abstract
This chapter presents the structural equation model that address two critical issues related to the unobservability of the attributes derived from various theoretical constructs and potential measurement errors. Further the proposed model also incorporates the possibility of cross-correlations across the unobservable factors. The results show that all the four specified attributes – Structure, Financial Constraint, Corporate Governance and Duality – significantly influence the CSR spending of large Indian firms. More specifically, we find evidence that poor corporate governance coupled with insider control over the board tend to explain the variation in CSR activities across firms. The other conventional factors such as age, size and financial viability of a firm also contribute to the CSR spending by these firms.
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Notes
- 1.
For example, based on takeover provisions, Gompers et al. (2003) construct an index of shareholder rights (GINDEX), which is a potential proxy for the extent to which a company suffers from managerial or director entrenchment.
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© 2016 Springer Science+Business Media Singapore
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Bhaduri, S.N., Selarka, E. (2016). Impact of Corporate Governance on Corporate Social Responsibility: An Empirical Exploration Using Structural Equation Technique. In: Corporate Governance and Corporate Social Responsibility of Indian Companies. CSR, Sustainability, Ethics & Governance. Springer, Singapore. https://doi.org/10.1007/978-981-10-0925-9_8
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DOI: https://doi.org/10.1007/978-981-10-0925-9_8
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