Does Social Performance Influence Breadth of Ownership?

31 Pages Posted: 8 Nov 2018

See all articles by Jeong-Bon Kim

Jeong-Bon Kim

City University of Hong Kong

Bing Li

City University of Hong Kong (CityUHK)

Zhenbin Liu

Hong Kong Baptist University

Multiple version iconThere are 2 versions of this paper

Date Written: October/November 2018

Abstract

This study examines the hitherto unexplored question of whether and how a firm's social performance influences the breadth of that firm's share ownership. We predict and find that firms with higher corporate social responsibility (CSR) ratings attract more institutional investors (especially long‐term, low‐stake and green institutional investors) and more individual investors. This finding is consistent with the notion that investors are more interested in firms with higher CSR ratings and thus prefer to hold stocks of such firms. We also find that firms with higher CSR ratings are associated with higher stock liquidity, lower cost of equity capital, more equity and debt issuance, and greater investment, and that sin stocks are associated with a lower investor base, which further corroborates our prediction. Our results are robust to potential endogeneity, the use of alternative model specifications, and an alternative proxy for CSR performance.

Keywords: breadth of ownership, corporate social responsibility (CSR), green investor, investor base, liquidity, stock

Suggested Citation

Kim, Jeong-Bon and Li, Bing and Liu, Zhenbin, Does Social Performance Influence Breadth of Ownership? (October/November 2018). Journal of Business Finance & Accounting, Vol. 45, Issue 9-10, pp. 1164-1194, 2018. Available at SSRN: https://ssrn.com/abstract=3280469 or http://dx.doi.org/10.1111/jbfa.12341

Jeong-Bon Kim

City University of Hong Kong ( email )

Department of Accountancy
83 Tat Chee Avenue
Kowloon Tong
Hong Kong
852-3442-7909 (Phone)

Bing Li

City University of Hong Kong (CityUHK) ( email )

83 Tat Chee Avenue
Department of Accountancy, AC3
Kowloon
Hong Kong

HOME PAGE: http://www.cb.cityu.edu.hk/staff/bingli/

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