76 Pages Posted: 28 Dec 2015 Last revised: 20 Oct 2017
Date Written: October 11, 2017
This paper assesses whether shareholders drive the environmental and social (E&S) performance of firms worldwide. Across 41 countries, we find that institutional ownership is positively associated with E&S performance with additional tests suggesting this relation is causal. Our evidence shows that institutions are motivated by both financial and social returns. Investors increase firms’ E&S performance following shocks that reveal financial benefits to E&S. In cross-section, investors increase firms’ E&S performance when they come from countries where there is a strong community belief in the importance of E&S issues, but not otherwise. Overall, these results indicate that investors drive firms’ E&S performance around the world and transplant their local social norms in that process.
Keywords: Corporate Social Responsibility, Institutional Investors, Social Norms, Culture
JEL Classification: G15, G23, G30, M14
Suggested Citation: Suggested Citation
Dyck, I. J. Alexander and Lins, Karl V. and Roth, Lukas and Wagner, Hannes F., Do Institutional Investors Drive Corporate Social Responsibility? International Evidence (October 11, 2017). Rotman School of Management Working Paper No. 2708589; 2nd Annual Financial Institutions, Regulation and Corporate Governance Conference. Available at SSRN: https://ssrn.com/abstract=2708589 or http://dx.doi.org/10.2139/ssrn.2708589