The impact of mandated Corporate Social Responsibility legislation on CSR disclosures: Unique evidence from section 135 of Indian Companies Act, 2013

The study examines the effect that the introduction of mandatory CSR as summarised in section 135 of Indian Companies Act, 2013 has had on the level of social, environmental, and overall CSR disclosure by publicly listed companies operating in environmentally sensitive industries in India. Results show a substantial increase in the number of reporting entities as well as the level of CSR disclosure. The results indicate that the impact of CSR legislation on CSR disclosure varies based on the types (e.g., social, environmental) of disclosures, total disclosure increase in the post period, and most importantly overall the firms mandated to disclose have lower disclosures than the other firms in the post period. Second, the results show a substantial deviation in terms of the items disclosed and strategies embraced for disclosure of only positive information and finally confirm our hypothesis that the total disclosure increase in CSR in post period is highly correlated with the implementation of section 135 of Indian Companies Act in 2013. Our results are mainly significant to regulatory and government authorities that are considering enactment of mandatory CSR activities and disclosure.