Social disclosure, business groups and firm risk

Abstract

Using a sample of 5718 BSE-listed firm-year observations from 2008 to 2021, we find that increased CSR disclosure (CSRDS) is negatively associated with firm risk. However, the risk-reducing effect of CSRDS is less pronounced in business group firms, with a stronger attenuation in companies managed by affiliated CEOs. Additional analyses indicate that enhanced CSRDS, particularly after the enforcement of mandatory CSR regulations, significantly reduces total and idiosyncratic risk. These findings highlight how mandatory regulatory compliance mitigates specific components of firm risk and offer policymakers, practitioners, and investors insights to navigate risk management within the governance structures of a developing market.