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This study fills the gap in the literature by considering the heterogeneous impact of institutional ownership on various dimensions of corporate social performance (CSP). Using the behavioural risk agency perspective, we argue that the risk behaviour of various institutional owners is not the same towards the CSP. We have taken a balanced panel sample of 61 Indian multinational firms for the span of 2013–2018 to test the proposed hypotheses. Results show a negative association of pressure-sensitive institutional investors’ ownership with social and governance dimensions of CSP. Mutual funds ownership is positively associated with the social and governance dimensions of CSP. Foreign institutional investors ownership has no significant impact on CSP. We found that the environmental dimension of CSP is ignored by institutional owners. The moderating effect of firm internationalisation on the relationship between institutional ownership and CSP is also examined.

Purpose COVID-19 induced uncertainty in the firms’ business transactions, financial markets and product-market competition, causing a severe organizational legitimacy crisis. Using the organizational legitimacy perspective and agency theory, this paper aims to study the relationship between prior corporate social responsibility (CSR) activities, monitoring cost (MC) and firm performance. Design/methodology/approach This study uses a quarterly panel (16,924 firm-quarter observations from 61 countries for CSR and 53,345 firm-quarter observations from 55 countries for MC) for 14 quarters from January 2018 to June 2021. This study uses panel fixed-effect regression models to estimate the effect of CSR activities and MC (measured as audit fees) on firm performance during the COVID-19 period. Findings This study finds a U-shaped relationship between CSR and firm performance. This relationship is strengthened during COVID-19. In contrast, this study finds an inverted U-shaped relationship between firm MC and firm performance. However, this relationship is weakened during the pandemic. Originality/value This study contributes to theory and practice on maintaining organizational legitimacy and reducing agency costs during the pandemic. This study shows that firms’ prior legitimacy-gaining practices, such as CSR activities and MC, provide an opportunity to increase firm value. To balance agency costs and legitimacy benefits, firm managers also need to identify the optimal level of CSR activities and MC.

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