Institutional investors and Corporate Social Responsibility: Evidence from China

Emerging Markets Finance and Trade

25 Pages Posted: 15 Jun 2022

See all articles by wanfang xiong

wanfang xiong

affiliation not provided to SSRN

Mengming (Michael) Dong

California State University Long Beach; Rice University

Cheng Xu

Xi'an Jiaotong-Liverpool University (XJTLU), International Business School Suzhou

Date Written: June 4, 2022

Abstract

In this paper, we examine the effect of institutional investors on corporate social responsibility (CSR). We use data on Chinese listed firms from 2010–2018 and find that (1) institutional investors significantly enhance CSR; (2) institutional investors are more inclined to affect CSR engagement through improving firms’ information transparency, internal control, and making more site visits; (3) this positive relationship is more profound for state-owned enterprises, politically connected firms, and firms with low financial constraint; and (4) only long-term institutional investors can drive CSR performance. We use three instrumental variables to address endogenous concerns and the results still hold. Overall, our findings indicate that institutional investors can have a social effect.

Keywords: corporate governance; institutional ownership; corporate social responsibility; China

JEL Classification: G30; M14

Suggested Citation

xiong, wanfang and Dong, Mengming (Michael) and Xu, Cheng, Institutional investors and Corporate Social Responsibility: Evidence from China (June 4, 2022). Emerging Markets Finance and Trade, Available at SSRN: https://ssrn.com/abstract=4127904

Wanfang Xiong

affiliation not provided to SSRN

Mengming (Michael) Dong

California State University Long Beach ( email )

1250 Bellflower Blvd., MS 5101
Long Beach, CA 90840
United States

Rice University ( email )

6100 South Main Street
Houston, TX 77005-1892
United States

Cheng Xu (Contact Author)

Xi'an Jiaotong-Liverpool University (XJTLU), International Business School Suzhou ( email )

Suzhou
China

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