Does Ownership Type Matter for Corporate Social Responsibility?

20 Pages Posted: 21 Apr 2012

See all articles by Lammertjan Dam

Lammertjan Dam

University of Groningen - Faculty of Economics and Business

Bert Scholtens

University of Groningen - Department of Finance & Accounting

Date Written: May 2012

Abstract

Manuscript Type: Empirical. Research Question/Issue: This study examines how different types of owners relate to corporate social responsibility (CSR). Research Findings/Insights: We use firm‐level data for more than 600 European firms from 16 countries and 35 industries for 2005. We find that ownership by employees, individuals, and firms is associated with relatively poor corporate social policies of the firms they invest in. In contrast, the holdings by banks and institutional investors as well as those by the state appear to be neutral in this respect. Theoretical/Academic Implications: This study develops and tests notions as to how particular types of owners could have a specific impact on the firm's CSR. The relative value put upon CSR can differ along different types of owners. This results from their different economic roles in society. The study provides empirical support for the relationship between ownership type and CSR policies in Europe. As such, it provides a new focus on the content of shareholder activism, namely that shareholder background has to be taken into account. Another innovation is that we show it is important to account for the multidimensional nature of CSR as well. Practitioner/Policy Implications: This study offers a new perspective for firms, investors and other stakeholders about portfolio investments and CSR. As we find that it does matter who invests, corporate engagement policies can be directed much more effectively. In particular, the investors who act as intermediaries appear to be the most sensitive ones in this respect. Our study suggests that firms should take the background of their shareholders into account in relation to their CSR strategy. Furthermore, our study helps stakeholders to direct their efforts more effectively. It also provides a perspective for executives and investment managers of multinational firms to consider if and how they can create social value next to shareholder value. We suggest that policy makers promote the transparency of ownership information as well as that of CSR performance.

Keywords: Corporate Governance, Corporate Social Responsibility, Firm Policy, Investor Activism, Investor Type

Suggested Citation

Dam, Lammertjan and Scholtens, Bert, Does Ownership Type Matter for Corporate Social Responsibility? (May 2012). Corporate Governance: An International Review, Vol. 20, Issue 3, pp. 233-252, 2012, Available at SSRN: https://ssrn.com/abstract=2042899 or http://dx.doi.org/10.1111/j.1467-8683.2011.00907.x

Lammertjan Dam (Contact Author)

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands
+31-50-3636518 (Phone)

Bert Scholtens

University of Groningen - Department of Finance & Accounting ( email )

P.O. Box 800
9700 AH Groningen
Netherlands

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
13
Abstract Views
1,271
PlumX Metrics