We study 115 Indian listed companies (ILCs) over the period 2009–2012. The study explicitly connects the Indian way of doing business with a broader mission of serving the community by arguing that dividend payout policy and signaling via voluntary CSR disclosures are strategic decisions made by the board of directors of ILCs to balance the interests of multiple stakeholders. The study finds that signaling via CSR disclosures and dividends are complementary means of managing this broader mission of stakeholder relations. The findings in the Indian context are similar to the study of European firms by De Villiers et al. (2020) in showing that managers use both CSR disclosure and dividends to signal sustainable future performance. Additionally, the results suggest that this complementary relation between dividends and CSR disclosures is particularly valued by institutional investors.
- Indian way
- Signaling theory
- Agency conflict
- Corporate social responsibility
- Firm value