Do institutional investors drive corporate social responsibility? International evidence

By Alexander Dyck, K. Lins, Lukáš Roth, Hannes F. Wagner. Journal of Financial Economics, 2019

1,918 citations recorded by the source corpus.

This paper assesses whether shareholders drive the environmental and social (E&S) performance of firms worldwide. Across 41 countries, institutional ownership is positively associated with E&S performance with additional tests suggests this relation is causal. Institutions are motivated by both financial and social returns. Investors increase firms’ E&S performance following shocks that reveal financial benefits to E&S improvements. In cross-section, investors increase firms’ E&S performance when they come from countries where there is a strong community belief in the importance of E&S issues, but not otherwise. As such, these institutional investors transplant their social norms regarding E&S issues around the world.

Subfields: Economics and Econometrics, Marketing, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/00ace08a4c0c7deaef253ced5e942c33424a828f

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Citations in the corpus

It’s who you know that counts: Board connectedness and CSR performance (2020, positive): “Following the CSR and board literatures (Ferrell et al., 2016; Chen et al., 2020; Dyck et al., 2019; Faleye et al., 2014; Intintoli, et al., 2018; Dhaliwal et al., 2011), we include in our empirical analysis several firm-, board-, and CEO-specific controls known to influence firms’ CSR performance.”
An Efficiency Perspective on Carbon Emissions and Financial Performance (2020, background): “Consistent with these mechanisms, Dyck et al. (2019) provide causal evidence that institutional shareholders promote environmental and social goals, indicating they see additional value in such issues.”
The Importance of Climate Risks for Institutional Investors (2020, background): “9 As argued in Ferreira and Matos (2008) and Dyck et al. (2019), independent institutions are more likely to collect information, have fewer potential business relationships with portfolio firms, and are therefore anticipated to be more involved in monitoring management.”
Companies Should Maximize Shareholder Welfare Not Market Value (2017, background): “As Dyck et al. (2016) show, institutional investors are having an impact on the Environmental & Sustainability performance of corporations, especially in Europe.”
Do foreign institutional investors drive corporate social responsibility? Evidence from listed firms in China (2020, methodology): “…and CSR performance, we specify the following regression model with fixed effects following Boubakri et al. (2016), McGuinness et al. (2017), and Dyck et al. (2019): CSRi,t = 𝛼 + 𝛽1QFIIi,t−1 + 𝛽2Controli,t−1 + Dyear + Dindustry + 𝜀i,t (1) whereCSR represents theCSRperformance rating;QFII…”
Get Real! Individuals Prefer More Sustainable Investments (2018, neutral): “For example, European institutional investors have a stronger influence on the environmental and social performance of countries than do American institutional investors (Dyck et al., 2018).”