This study investigates the impact of excess corporate social responsibility (CSR) spending on firms’ stock market performance. Using a longitudinal sample of listed firms in India, we find that non-family firms spending more than industry peers and historical amounts on CSR are associated with more positive stock market performance than those that do not overspend. In contrast, family firms with excess CSR expenditure are associated with worse stock performance than peers without excess spending. In addition, the negative stock market reactions to family firms’ overspending are more pronounced in family firms led by founder CEOs and in family firms that utilize family-associated trusts and foundations to implement CSR projects. Our findings are robust across tests for endogeneity and alternative empirical models and measures. Overall, this study suggests that shareholders react differently to firms’ excess CSR expenditure based on firms’ ownership structure and motivations. Going above and beyond on CSR expenditure may not necessarily pay off in terms of market value.
