Do institutional investors drive corporate social responsibility? International evidence

This paper assesses whether shareholders drive the environmental and social (E&S) performance of firms worldwide. Across 41 countries, institutional ownership is positively associated with E&S performance with additional tests suggesting this relation is causal. Institutions are motivated by...

Full description

Saved in:
Bibliographic Details
Published in:Journal of financial economics 2019-03, Vol.131 (3), p.693-714
Main Authors: Dyck, Alexander, Lins, Karl V., Roth, Lukas, Wagner, Hannes F.
Format: Article
Language:English
Subjects:
Companies
Corporate social responsibility
Culture
Environment
Institutional investments
Institutional investors
Investors
Norms
Ownership
Social norms
Social responsibility
Stockholders
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This paper assesses whether shareholders drive the environmental and social (E&S) performance of firms worldwide. Across 41 countries, institutional ownership is positively associated with E&S performance with additional tests suggesting this relation is causal. Institutions are motivated by both financial and social returns. Investors increase firms’ E&S performance following shocks that reveal financial benefits to E&S improvements. In cross section, investors increase firms’ E&S performance when they come from countries with a strong community belief in the importance of E&S issues, but not otherwise. As such, these institutional investors transplant their social norms regarding E&S issues around the world.
ISSN:0304-405X
1879-2774
DOI:10.1016/j.jfineco.2018.08.013