CSR Initiative & Its Impact Upon Share Prices

This article explores the impact of CSR initiatives on share prices, using Tata Group as a case study. It examines the company's CSR activities and how they have affected shareholder decision-making.

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Running head: CSR INITIATIVE & ITS IMPACT UPON SHARE PRICES
CSR INITIATIVE & ITS IMPACT UPON SHARE PRICES
Name of the Student
Name of the University
Author’s Note

1CSR INITIATIVE & ITS IMPACT UPON SHARE PRICES
Table of Contents
Introduction......................................................................................................................................2
Tata Group.......................................................................................................................................2
Peer group Analysis.........................................................................................................................8
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

2CSR INITIATIVE & ITS IMPACT UPON SHARE PRICES
Introduction
From the initiation of the barter system till the modern era of plastic money a very long
path is trodden by mankind. Profitability may not be the only driving force but also the aspect of
social welfare is an aspect of importance for rendering growth and development in the market
sphere in the long run. The cut throat competition as well as business rivalries is prevalent in the
market and due to this reason it necessitates ensuring quality of the goods and services,
transparency in the financial transactions involved. This is because of the fact that it mutually
boost the business environment as well as the socio economic environment rendering welfare for
both the society and the corporate world (Cahyandito and Pau. 2017). This incorporate the
importance of practicing corporate social responsibility for business organizations. The paper
delve into the corporate social activities of TATA group and examines how their CSR activities
impacts the share prices as well as shareholders decision making for the company.
Tata Group
The Tata group have their business in multiple fields and among which it have
multinational presence. Tata steel, Tata motors, Tata power, Tata global beverages, Tata Tele
services, etc. are the companies that are working to together in different fields. The company
have its presence in airlines, automotive, chemicals, electrical utility, locomotives, retail,
healthcare, information technology, hospitality, real estate, steel, telecommunication, defense,
finance, home appliance, etc. and many other domains. This renders the probability for the
organization to diversify its investment in different fields and utilize the profit earned from the
diversified fields (Iyanar and Prasad. 2018). It is important to understand that the company’s
presence in multidimensional fields enables an opportunity to the organization to cope up with
the market fluctuations and render a better state of return in effective manner. The revenue

3CSR INITIATIVE & ITS IMPACT UPON SHARE PRICES
generation of the company is 100. 4 billion by 2018 along with the amount of total assets being
135 billion and the number of employees are 700, 000 (Friedman and Heinle. 2016).
The TATA group have invested substantial percentage of their profit in activities that are
related to corporate social responsibility. During the financial year of 2017- 18 the company is
being found to invest over 6 lakhs in CSR projects that positively affected the economy. 40 % of
the CSR budget is being found to get invested with affirmation of the SC/ST communities in
order to ensure betterment in the segment of employability and the overall environment of the
rural communities. Tata have differentiate its policies by extracting 20 rupees from the salaries
of its employees and invested them in the betterment of the victimized women of the rural India
followed by sponsoring children for their educations through non-formal education centers
(Gomes and Marsat. 2018). Tata reinforced its investments in the segments of health and
hospitality followed by gathering their employees’ money for investing them in lessening
pollution and serving safe water to various communities of the country (Iyanar and Prasad.
2018). Share prices are the reflection of the investments that are being done by the investors who
are not only interested upon the company but also possess the trust upon the company that it will
grow over time. The initiatives of Tata group to boost the economic structure of the country
based on their abilities have invest in the corporate social activities have also found to impress
the shareholders of thee company for which the share prices are found to get impacted by the
financial year of 2017- 18 (De Klerk, de Villiers and van Staden. 2015) highlighted as follows:
TATA GROUP OF INDUSTRIES
Date Open High Low Close Adjusted Close Volume Change in
Share
Prices

4CSR INITIATIVE & ITS IMPACT UPON SHARE PRICES
31/12/2016 474. 95 553 469. 2 523. 6 523. 6 10130929 - 67. 45
31/01/2017 525. 55 544. 8 435 456. 15 456. 15 14480959 9. 800018
28/02/2017 457. 5 484. 3 448 465. 95 465. 95 12098007 - 8. 15002
31/03/2017 469 480 437 457. 8 457. 8 9035809 18. 40002
30/04/2017 457. 8 487 417. 1 476. 2 476. 2 14234698 - 43. 7
31/05/2017 477 485. 95 428 432. 5 432. 5 93104805 12
30/06/2017 433. 7 468 426. 1 444. 5 444. 5 10778762 - 67. 9
31/07/2017 445 452. 25 357. 95 376. 6 376. 6 15060796 24. 64999
31/08/2017 379 428. 2 374 401. 25 401. 25 59388584 27. 29999
30/09/2017 401. 25 439. 9 401. 25 428. 55 428. 55 7572208 - 23. 9
31/10/2017 430. 05 466. 95 402. 95 404. 65 404. 65 31312879 26. 55002
30/11/2017 409. 1 432. 5 389. 75 431. 2 431. 2 12338601 - 35
31/12/2017 432. 2 443. 55 395. 3 396. 2 396. 2 21220506 - 26
31/01/2018 401 403. 85 357 370. 2 370. 2 25499108 - 42. 75
28/02/2018 367. 9 376. 25 324. 5 327. 45 327. 45 12543946 12. 75
31/03/2018 335 372. 4 326. 1 340. 2 340. 2 14912163 - 57. 3
30/04/2018 340. 2 352 282 282. 9 282. 9 20860213 - 13. 6
31/05/2018 286. 65 315 262. 5 269. 3 269. 3 19914420 - 5. 14999
30/06/2018 276 277. 1 247. 55 264. 15 264. 15 20149843 2. 950012
31/07/2018 248 274. 6 243. 25 267. 1 267. 1 21224071 - 43. 65
31/08/2018 271. 7 282 219. 65 223. 45 223. 45 23177759 - 44. 8

5CSR INITIATIVE & ITS IMPACT UPON SHARE PRICES
30/09/2018 224. 3 232. 75 164. 55 178. 65 178. 65 46670998 - 6. 7
31/10/2018 179. 2 200. 75 170. 5 171. 95 171. 95 31998212 0. 650009
30/11/2018 173. 7 180. 45 154. 7 172. 6 172. 6 30692434 7. 849994
31/12/2018 173. 7 187. 55 165. 4 180. 45 180. 45 20573998 0
This is been found from the valuation of the change in the share prices that the variance is
high before the implementation of the corporate-social responsibility activities while the variance
is low after the implementation of it (Lee. 2016). The shareholders have found that the company
has a disciplinary organizational culture where the employees as well as the other stakeholders
gets interested in becoming allied with the organization. Along with that the investors trusted
their investment in the organization upon the fact that the company will grow overtime. It is been
found that the share prices use to fluctuate more based on the market affecting factors and the
economic condition of the country (Marhfor, Bouslah and M’Zali. 2017). However, after the
implementation off the CSR initiatives share prices remained close to the mean and the measure
of dispersion is low as found from the data about share prices of the company. The company was
moving through a period where the performance of its automobiles were good in oversees though
there was lack in substantial rise in the share prices and the volume of its shares. However, Tata
initiated implementation of consistent initiatives that boosted their performance by acquisition of
brand loyal shareholders that are convinced to support the company over the long run due to its
systematic approach towards improving business performance by incorporation of innovative
approach and CSR activities (Jizi, Nehme and Salama. 2016).
TATA GROUP OF INDUSTRIES

6CSR INITIATIVE & ITS IMPACT UPON SHARE PRICES
Date Open High Low Close
Adjusted
Close
Volum
e
Change
in Share
Prices
1/01/201
9
173.
699997
174.
300003
171.
350006 173. 6 173. 6 508944
- 5.
050003
2/01/201
9 171
171.
699997 168
168.
55 168. 55 966921
- 2.
350006
3/01/201
9
169.
300003
170.
100006
165.
399994 166. 2 166. 2 737133
4.
550003
4/01/201
9
168.
100006
171.
899994
168.
100006
170.
75 170. 75
158754
5 4. 5
7/01/201
9 173
178.
300003 173
175.
25 175. 25
171842
3
4.
100006
8/01/201
9
176.
300003 180. 5
176.
100006
179.
35 179. 35
281230
2 3. 75
9/01/201
9
181.
899994
183.
899994
180.
300003 183. 1 183. 1
170419
9
2.
449997
10/01/20
19
183.
649994
186.
800003
183.
399994
185.
55 185. 55
139574
4 - 5. 25
11/01/20
19
186.
300003
187.
550003
179.
449997 180. 3 180. 3
167513
0 2

7CSR INITIATIVE & ITS IMPACT UPON SHARE PRICES
14/01/20
19
180.
550003
187.
399994
177.
550003 182. 3 182. 3
139407
9
3.
099991
15/01/20
19
183.
199997
185.
800003
181.
449997 185. 4 185. 4 987729
- 0.
099991
16/01/20
19 185. 5
187.
300003
184.
100006 185. 3 185. 3
112513
4 - 0. 5
17/01/20
19
186.
300003
187.
350006
183.
399994 184. 8 184. 8 923301
- 1.
699997
18/01/20
19 185. 5
185.
600006
181.
399994 183. 1 183. 1 678382
- 1.
700012
21/01/20
19
183.
300003
184.
850006
180.
399994 181. 4 181. 4 976947
- 0.
949997
22/01/20
19
181.
399994
182.
649994
176.
050003
180.
45 180. 45
138208
5
It is been seen that the average share prices have increased after the implementation of
the corporate social responsibilities by Tata group. There is presence of downfall of the share
prices on a particular day while rise in the share prices in the other days (Rafiq, Atiq and Yunis.
2016). However, from overall perspective it has been found that the shareholders are satisfied
with the consistent functionality of the firm overtime. The brand value of the company have
aroused due to their social welfare initiatives along with executing corporate affairs effectively.

8CSR INITIATIVE & ITS IMPACT UPON SHARE PRICES
Peer group Analysis
The business of Tata may have raised due to their merger and acquisition activities as
well as investments in companies like Vistara, Sofie Biosciences, Flisom, etc. But their CSR
initiatives are noteworthy as their CSR investments are being done about a minimum of 8 % of
their annual revenue earnings (Rhou, Singal and Koh. 2016). The peer group analysis renders an
understanding regarding Tata group’s performance and their change in share valuations with
respect to the share price rise of other competitive firms after the impact of the CSR activities
(Singh. 2018). The top competitors of Tata group are Mahindra, Reliance, and Aditya Birla
group.
TATA MAHINDRA RELIANCE
ADITYA BIRLA
GROUP
Variance in Share
Prices
Variance in Share
Prices
Variance in Share
Prices
Variance in Share
Prices
-5.050003 -32.099976 -14.599976 2.699997
-2.350006 -22.549988 -13.650024 6.900009
4.550003 7.200012 5.900024 -0.050003
4.5 3.449952 6.099976 -0.399994
4.100006 -5.049988 -0.099976 -0.350006
3.75 1.549988 6.099976 -1.300003
2.449997 7.200012 -3.25 -7.699997
-5.25 -4.599976 -9.449951 7.25
2 -4.200012 -1.25 1.099991

9CSR INITIATIVE & ITS IMPACT UPON SHARE PRICES
3.099991 2.150024 32.849975 -3.199982
-0.099991 -1 6.25 -0.400009
-0.5 8.599976 -1.450073 -1.199997
-1.699997 0.400024 49.900025 -1.5E-05
-1.700012 -4.100036 53.349975 0.750015
-0.949997 -22.5 -2.549927 -1.75
Mean of the change
before the
implementation of the
CSR activities
Mean of the change
before the
implementation of the
CSR activities
Mean of the change
before the
implementation of the
CSR activities
Mean of the change
before the
implementation of the
CSR activities
-13.600006 -5.149994 -13.600006 -13.600006
Mean of the change
after the
implementation of the
CSR activities
Mean of the change
after the
implementation of the
CSR activities
Mean of the change
after the
implementation of the
CSR activities
Mean of the change
after the
implementation of the
CSR activities
0.456666067 -2.79666747 7.6100016 -0.616666667
This shows the fact there is variation in the share prices of the competitors too where only
Mahindra have the lowest fluctuation in the share prices before the implementation of CSR
activities. However, after implementation of the CSR initiatives the deviation from the mean
values is lowest in case of Tata group and that of Reliance Industries (Verbeeten, Gamerschlag
and Möller. 2016). The rise in the share prices are high both the companies while in case of
Mahindra and Aditya Birla group the rise in the share prices are not very high. Moreover, the

10CSR INITIATIVE & ITS IMPACT UPON SHARE PRICES
only competitor for Tata group in terms of acquiring more shareholders and ensuring rise in the
share values is Reliance since it have performed better as compared to that of Mahindra and
Aditya Birla group.
Conclusion
It can be concluded that the unique endeavor of Tata group in the CSR activities have
given it the opportunity to acquire more brand loyal stakeholders that helped them to raise their
share value and maintain a consistency over their business performance. The company is able to
render considerable challenges to its competitors due to the reason that their CSR initiatives to
boost the rural India through activities that are quite important in daily life of common people
and serve their daily needs like providence of safe water, empowering rural women, educating
poor children, etc. affected positively towards the company’s growth as well as supported the
strategies in increasing the values of their share prices.

11CSR INITIATIVE & ITS IMPACT UPON SHARE PRICES
References
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Communications and Informatics (ICACCI) (pp. 2196-2199). IEEE.
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Lee, M.T., 2016. Corporate social responsibility and stock price crash risk: Evidence from an
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Announcements on Shareholders' Wealth. FWU Journal of Social Sciences, 10(2), p.99.
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Singh, J., 2018. Impact of Automobile Recalls on Stock Prices: A Study in the Indian
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