In 2013, a new law required Indian firms, which satisfied certain size and profitability thresholds, to spend at least 2% of their net income on CSR. We exploit this natural experiment to isolate the shareholder value implications of CSR activities. Using several identification strategies, including an event study, regression discontinuity design, difference-in-difference tests, and instrument variable approach, we find that the law caused a significant drop in the stock price of firms forced to spend money on CSR, consistent with the idea that firms voluntarily choose CSR levels to maximize firm value. Firms with greater agency costs and political connections benefit from mandatory CSR. Our results potentially clarify the direction of causality underlying decades of mixed findings on the association between CSR and firm value.