Do Institutional Investors Drive Corporate Social Responsibility? International Evidence
60 Pages Posted: 28 Mar 2018
Date Written: March 1, 2018
This paper assesses whether shareholders drive the environmental and social (E&S) performance of firms worldwide. Across 41 countries, institutional ownership is positively associated with E&S performance with additional tests suggests this relation is causal. Institutions are motivated by both financial and social returns. Investors increase firms’ E&S performance following shocks that reveal financial benefits to E&S improvements. 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. As such, these institutional investors transplant their social norms regarding E&S issues around the world.
Keywords: Corporate Social Responsibility, Institutional Investors, Social Norms, Culture
JEL Classification: G15, G23, G30, M14
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