Do Long-term Institutional Investors Promote Corporate Social Responsibility Activities?

45 Pages Posted: 22 Aug 2019

See all articles by Hyun-Dong Kim

Hyun-Dong Kim

Graduate School of International Studies, Sogang University

Kim Taeyeon

Korea Advanced Institute of Science and Technology (KAIST), College of Business

Yura kim

University of Seoul

Kwangwoo Park

KAIST (Korea Advanced Institute of Science and Technology) - College of Business

Date Written: April 29, 2019

Abstract

This paper examines how the investment horizons of a firm's institutional investors affect its corporate social responsibility (CSR) activities. Using data on U.S. firms’ CSR ratings over the 1995–2012 period, we find that longer investment horizons are positively related to CSR. Further, active long-term institutions increase CSR whereas passive long-term institutions have no significant effect. Our results suggest that investors with long-term horizons have more incentives to monitor their firms which leads managers to engage in more vigorous CSR activities.

Keywords: Corporate social responsibility (CSR)Institutional investorInvestment horizonMonitoring incentive

JEL Classification: M14, G31, G32, G34

Suggested Citation

Kim, Hyun-Dong and Taeyeon, Kim and kim, Yura and Park, Kwangwoo, Do Long-term Institutional Investors Promote Corporate Social Responsibility Activities? (April 29, 2019). Journal of Banking and Finance, Vol. 101, No. 4, 2019. Available at SSRN: https://ssrn.com/abstract=3379629

Hyun-Dong Kim

Graduate School of International Studies, Sogang University ( email )

Seoul, 04107
Korea, Republic of (South Korea)

Kim Taeyeon

Korea Advanced Institute of Science and Technology (KAIST), College of Business ( email )

85 Hoegiro, Dongdaemoon-gu
Seoul
Korea, Republic of (South Korea)

Yura Kim

University of Seoul ( email )

Seoul
Korea, Republic of (South Korea)

Kwangwoo Park (Contact Author)

KAIST (Korea Advanced Institute of Science and Technology) - College of Business ( email )

85 Hoegiro
Seoul 02455
Korea, Republic of (South Korea)
82-2-958-3540 (Phone)
82-2-958-3604 (Fax)

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