{"title":"CSR regulation and the working capital management policy","authors":"Nemiraja Jadiyappa, Rachappa Shette","doi":"10.1016/j.gfj.2024.100934","DOIUrl":null,"url":null,"abstract":"<div><p>This study examined the impact of CSR regulation on the working capital management of Indian firms, using the mandatory 2% CSR spending regulation implemented in India in 2015 as a quasi-natural experiment setup. We used the cash conversion cycle (CC_Cycle) as a proxy to measure working capital management, determining that CSR regulation positively impacted the CC_Cycle. Furthermore, cheaper debt from institutional sources replaced the costly trade credit, which drives this relationship. Our results remained robust for various model specifications, estimators, and sample selection procedures. They were consistent with the views of the financial access hypothesis, suggesting that CSR activities increase firms' access to finance from institutional sources, allowing firms to replace costly trade credits with cheaper institutional capital.</p></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"59 ","pages":"Article 100934"},"PeriodicalIF":5.5000,"publicationDate":"2024-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Global Finance Journal","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1044028324000061","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
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Abstract
This study examined the impact of CSR regulation on the working capital management of Indian firms, using the mandatory 2% CSR spending regulation implemented in India in 2015 as a quasi-natural experiment setup. We used the cash conversion cycle (CC_Cycle) as a proxy to measure working capital management, determining that CSR regulation positively impacted the CC_Cycle. Furthermore, cheaper debt from institutional sources replaced the costly trade credit, which drives this relationship. Our results remained robust for various model specifications, estimators, and sample selection procedures. They were consistent with the views of the financial access hypothesis, suggesting that CSR activities increase firms' access to finance from institutional sources, allowing firms to replace costly trade credits with cheaper institutional capital.
期刊介绍：
Global Finance Journal provides a forum for the exchange of ideas and techniques among academicians and practitioners and, thereby, advances applied research in global financial management. Global Finance Journal publishes original, creative, scholarly research that integrates theory and practice and addresses a readership in both business and academia. Articles reflecting pragmatic research are sought in areas such as financial management, investment, banking and financial services, accounting, and taxation. Global Finance Journal welcomes contributions from scholars in both the business and academic community and encourages collaborative research from this broad base worldwide.
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