Investor Horizons, Long-Term Blockholders, and Corporate Social Responsibility

65 Pages Posted: 29 May 2018

See all articles by Simon Glossner

Simon Glossner

Board of Governors of the Federal Reserve System

Date Written: February 12, 2018

Abstract

This paper investigates whether shareholders benefit from corporate social responsibility (CSR) by studying the effect of institutional investors on CSR. After all, arguing against CSR is hard when investors push for it. I find that longer investor horizons lead to significantly more CSR. This positive effect, however, is moderated by long-term investors who hold large ownership blocks. Long-term blockholders ensure, through monitoring, that managers do not blindly increase CSR, but rather pursue a CSR strategy that reduces the risk of costly incidents. Overall, these findings indicate that CSR is in the interests of long-term investors if CSR prevents incidents.

Keywords: Corporate Social Responsibility, Institutional Investors, Institutional Ownership, Investor Horizon, Blockholders, Long-Term Corporate Investment

JEL Classification: G23, G30, M14

Suggested Citation

Glossner, Simon, Investor Horizons, Long-Term Blockholders, and Corporate Social Responsibility (February 12, 2018). Available at SSRN: https://ssrn.com/abstract=3180779 or http://dx.doi.org/10.2139/ssrn.3180779

Simon Glossner (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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