Corporate Social Responsibility and Foreign Institutional Investor Heterogeneity

70 Pages Posted: 8 Jun 2020 Last revised: 27 Aug 2020

See all articles by Partha P. Roy

Partha P. Roy

University of Strathclyde

Sandeep Rao

Dublin City University Business School

Andrew P. Marshall

University of Strathclyde - Strathclyde Business School

Chandra Thapa

University of Strathclyde

Date Written: May 30, 2020

Abstract

This article examines whether the heterogeneity of foreign institutional investors (FIIs) matters when investing in host firms that are considered to be socially responsible. Exploiting a mandated corporate social responsibility (CSR) regulation and using actual CSR expenditure data, the results of a quasi-natural experiment show that host firms that comply with the CSR mandate attract more FII investment. However, the heterogeneity of FIIs plays a significant role as we find that FIIs from civil law origin countries and, those considered to be independent and long-term investors invest more in mandated CSR firms. Finally, the empirical evidence also indicates that firms that comply with the CSR mandate experience higher long-term market-based valuations in the post-CSR reform period.

Keywords: CSR expenditure, Foreign institutional investors, Legal origin, Independent and long-term investors, Market valuation

JEL Classification: G23, G38, M14

Suggested Citation

Roy, Partha P. and Rao, Sandeep and Marshall, Andrew P. and Thapa, Chandra, Corporate Social Responsibility and Foreign Institutional Investor Heterogeneity (May 30, 2020). Available at SSRN: https://ssrn.com/abstract=3614327 or http://dx.doi.org/10.2139/ssrn.3614327

Partha P. Roy (Contact Author)

University of Strathclyde ( email )

199 Cathedral Street
Glasgow, Scotland G4 0QU
United Kingdom

Sandeep Rao

Dublin City University Business School ( email )

Dublin 9
Ireland

Andrew P. Marshall

University of Strathclyde - Strathclyde Business School ( email )

100 Cathedral Street
Glasgow G4 0LN
United Kingdom
44 0141 548 3894 (Phone)

Chandra Thapa

University of Strathclyde ( email )

16 Richmond Street
Glasgow 1XQ, Scotland G1 1XQ
United Kingdom

HOME PAGE: http://https://www.strath.ac.uk/staff/thapachandradr/

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