Great Expectations: Institutional Logics and the Evaluation of Corporate Social Responsibility
41 Pages Posted: 30 Jan 2022 Last revised: 17 Apr 2023
Date Written: January 26, 2022
Abstract
Drawing on a neo-institutional theory perspective that emphasizes the isomorphic diffusion of practices, some research argues that there is a shift from an agency to a stakeholder logic in financial markets and in financial analysts in particular. Drawing on the institutional complexity literature and the logics perspective, we extend this research by providing arguments and evidence showing that while the stakeholder logic is certainly becoming more pervasive, it may not be replacing or even weakening the agency logic. In fact, our research suggests that the stakeholder and agency logics co-exist, and under certain conditions, may even be complementary. This complementarity depends on whether firms embrace corporate governance safeguards. Also, our theory on the critical role of institutional logics in shaping analysts’ disagreement is further supported by firm efforts to actively conform to those preferences using impression management tactics. Following higher analysts’ disagreement, firms committed to the stakeholder logic (but not committed to the agency logic) are more likely to use impression management practices signaling to analysts’ commitment to the agency logic, which, however, fail to affect analysts.
Keywords: Agency Logic, Financial Analysts, Institutional Complexity; Institutional Logics Perspective, Stakeholder Logic, Impression Management
JEL Classification: M14
Suggested Citation: Suggested Citation