Published Online:July 2026
Product Name:The IUP Journal of Corporate Governance
Product Type:Article
Product Code:IJCG050726
DOI:10.71329/IUPJCG/2026.25.3.78-98
Author Name:Navin Chettri
Availability:YES
Subject/Domain:Management
Download Format:PDF
Pages:78-98
The study provides a review of the mediating effect of Dividend Payout (DP) in the association between Corporate Social Responsibility (CSR) and firm value (FV). Data was collected for a seven-year period from 2015 to 2021 from 657 firms which were listed on the National Stock Exchange (NSE) and had been mandated to spend on CSR as per the Companies Act, 2013. The analysis of the relationship between the variables of the models was done using partial least squares (PLS-SEM) approach. Empirically, the findings indicate that CSR spending positively influences both FV and DP, while the DP-FV relation is negative. However, upon analyzing the mediating relationship, it can be seen that DP negatively mediates the CSR-FV association such that the significant direct CSR-FV association is canceled by the negative association mediated through DP, thus making the total effect insignificant—an instance of inconsistent mediation. The explanation to the above pattern can be found in the Tax Preference Theory, which holds that in an emerging market environment, the investors are against dividends because these payments are taxable, while capital gains are favorable, hence the reason why DP is a value-destroying mechanism whenever the dividend payment is high. It is evident that the decision to increase dividend should never be CSR-driven.
Corporate social responsibilty (CSR) is a concept that extends beyond the primary objective of profit maximization and makes corporations accountable to society and its stakeholders. Integration of CSR into business strategies has become increasingly prevalent across industries (Kunda et al., 2019). Scholars like Levitt (1958) and Friedman (1970) term it a “fashion accessory” of self-interested businessmen driven by their political motives rather than a genuine concern for their company’s health or societal welfare.