66 Pages Posted: 28 Dec 2015 Last revised: 21 Dec 2016
Date Written: December 20, 2016
This paper assesses whether the environmental and social (E&S) performance of firms worldwide is driven by shareholders — an important channel to study because it is their money being spent. Across 41 countries, we find that institutional ownership is positively associated with firm-level E&S performance with multiple tests suggesting this relation is causal. We test whether investors are motivated by their local social norms towards E&S issues. 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, our results indicate that institutional 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 (December 20, 2016). 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
By Jiri Novak