This study examines how plant location affects a firm’s compliance with CSR spending regulations and the types of CSR spending. Utilizing a longitudinal sample of listed firms in India between 2015 to 2019, we find that firms with plants located in states with larger poverty rates, more serious environmental pollution, larger female labor force participation rates, lower school enrolment rates, and lower disease rates are more likely to comply with the mandatory CSR spending regulation. We also document that firms with plants located in states with higher poverty rates are more likely to contribute to social welfare; those with plants located in more polluted states tend to invest more in environmental protection; those with plants in areas with higher female labor force participation rates and lower school enrolment rates are more prone to contribute to education; and those with plants located in areas with lower disease rates tend to spend on healthcare. In addition, we find that firms with plants located in regions with larger poverty rates, lower school enrolment rates, and larger female labor force participation rates tend to contribute more than the required amount of corporate revenues to CSR activities. Finally, we document that firms with plats in impoverished and more polluted areas, areas with larger female labor force participation rates, lower school enrolment rates, and lower disease rates are more likely to contribute more categories of CSR activities. Overall, our paper reveals that CSR spending and the types of spending are shaped by subnational institutional environments. The unique needs of regions where a firm’s plants are located not only affect the firm’s compliance likelihood but also channel the firm’s CSR expenditures into specific domains.
