Do Institutional Investors Drive Corporate Social Responsibility? International Evidence

60 Pages Posted: 28 Mar 2018

See all articles by I. J. Alexander Dyck

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

Multiple version iconThere are 2 versions of this paper

Date Written: March 1, 2018

Abstract

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

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 (March 1, 2018). Journal of Financial Economics (JFE), Forthcoming; University of Alberta School of Business Research Paper No. 3150282; Rotman School of Management Working Paper No. 3150282; BAFFI CAREFIN Centre Research Paper No. 2018-73. Available at SSRN: https://ssrn.com/abstract=3150282

I.J. Alexander 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 V. 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

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 F. Wagner (Contact Author)

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

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