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Abstract Businesses that contribute to social welfare and development are regarded as reliable and generate more wealth for their stakeholders. This study attempts to determine how corporate social responsibility (CSR) and environmental protection measures influence the financial performance of Indian businesses. A panel dataset containing 330 Nifty 500 companies is included to determine their relationship. The quarterly and semi‐annual share prices are employed as proxies for the financial performance of companies. In the regression model, the lagged share prices (log) of two periods serve as the response variable, while the CSR and the CSR plus the environment and pollution control expenses (CSREP) serve as explanatory variables. The results suggest that the fixed‐effect regression model is suitable where the explanatory variables are time‐invariant and the relationship between the dependent and explanatory variables across firms is constant over time. Our analysis indicates that CSR spending alone has little effect on the share prices of companies over two prospective time periods. However, as companies invest more in environmental and pollution control activities in addition to their CSR expenditure, the market recognises this as a significant factor, and their share prices rise. Consequently, we discovered that CSREP (CSR plus environmental and pollution control expenditure) is a significant factor that influences quarterly and semi‐annual share prices.
Panda et al. (Sat,) studied this question.