Download this Paper Open PDF in Browser

Do Institutional Investors Drive Corporate Social Responsibility? International Evidence

76 Pages Posted: 28 Dec 2015 Last revised: 20 Oct 2017

I. J. Alexander Dyck

University of Toronto - Rotman School of Management

Karl V. Lins

University of Utah - Department of Finance

Lukas Roth

University of Alberta - Department of Finance and Statistical Analysis

Hannes F. Wagner

Bocconi University - Department of Finance; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research

Date Written: October 11, 2017

Abstract

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

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

I.J. Dyck

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S 3E6
Canada
416-946-0819 (Phone)

Karl Lins

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States
801-585-3171 (Phone)
801-581-7214 (Fax)

Lukas Roth (Contact Author)

University of Alberta - Department of Finance and Statistical Analysis ( email )

2-32E Business Building
Edmonton, Alberta T6G 2R6
Canada
780-492-4431 (Phone)
780-492-3325 (Fax)

Hannes Wagner

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

HOME PAGE: http://faculty.unibocconi.eu/hanneswagner

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

Paper statistics

Downloads
766
Rank
26,635
Abstract Views
2,416