Do institutional investors drive corporate social responsibility? International evidence

Dyck, Alexander; Lins, Karl V.; Roth, Lukas; Wagner, Hannes F.

doi:10.1016/j.jfineco.2018.08.013

Cited by 1,355 publications

(721 citation statements)

References 36 publications

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“…Specifically, in column (3), we use data from both institutional and noninstitutional share classes, we include globe rating dummy variables, and we also include interactions between the globe rating dummies and a dummy variable equal to one if the share class is institutional. Including the globe dummy variables and the interaction terms means that the coefficient on the institutional interaction captures how the flows into the institutional share classes with a given globe rating compare to those into the 22 Evidence in support of this hypothesis would be consistent with prior literature, showing that institutional investors drive firms' environmental and social investments (e.g., Dyck et al (2019)) and the importance of institutional investors more broadly (e.g., Gillan and Starks (2000), Gillan and Starks (2003)). 23 We use Morningstar's classification of institutional shares, which typically requires an investment of greater than $100,000.…”

Section: A Institutional Constraintsmentioning

confidence: 62%

Do Investors Value Sustainability? A Natural Experiment Examining Ranking and Fund Flows

Hartzmark¹,

Sussman

2019

The Journal of Finance

929

272

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Examining a shock to the salience of the sustainability of the U.S. mutual fund market, we present causal evidence that investors marketwide value sustainability: being categorized as low sustainability resulted in net outflows of more than $12 billion while being categorized as high sustainability led to net inflows of more than $24 billion. Experimental evidence suggests that sustainability is viewed as positively predicting future performance, but we do not find evidence that high‐sustainability funds outperform low‐sustainability funds. The evidence is consistent with positive affect influencing expectations of sustainable fund performance and nonpecuniary motives influencing investment decisions.

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Section: A Institutional Constraintsmentioning

confidence: 62%

Do Investors Value Sustainability? A Natural Experiment Examining Ranking and Fund Flows

Hartzmark¹,

Sussman

2019

The Journal of Finance

929

272

View full text Add to dashboard Cite

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“…Thus, institutional directors are likely to support CSR activities because they are necessary for long-term value creation (Mahapatra, 1984). In this regard, previous research shows a positive impact of institutional investors on CSR practices, demonstrating the effectiveness of these owners in promoting responsible behavior (e.g., Dyck, Lins, Roth, & Wagner, 2015).…”

Section: Theoretical Background and Hypothesesmentioning

confidence: 97%

The role of directors representing institutional ownership in sustainable development through corporate social responsibility reporting

Pucheta‐Martínez

Chiva-Ortells

2018

Sustainable Development

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In this paper, we analyze the effect that directors representing controlling shareholders, specifically institutional investors, have on corporate social responsibility (CSR) given that these investors are the core shareholders in civil law countries, owing to their high presence on boards. Thus, we analyze the effect of institutional directors on CSR disclosure, but also the impact of their classification between pressure‐sensitive and pressure‐resistant institutional directors, depending on if they maintain only an investment relationship with the firm or both an investment and a commercial link, respectively. We hypothesize that these directors may perform opposite roles (monitoring or aligning with managers) regarding CSR disclosure. We show a curvilinear relationship between institutional directors/pressure‐resistant directors and CSR reporting, suggesting the two opposite roles mentioned. However, pressure‐sensitive directors do not affect CSR disclosure. These findings indicate that there is an association between board members and strategic decisions. Moreover, our evidence shows that institutional directors do not act in an identical way. Finally, the enhancement of corporate governance depends on the proportion of institutional and pressure‐resistant directors on boards.

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“…Various actors are present, including managers, investors, customers, suppliers, NGOs and scientific researchers. For listed companies, investors play a key role as social norms may flow through the channel of portfolio investment into firms that support strong environmental and social performance (Dyck et al, 2018). Institutional investor activism is becoming the norm as a way to force changes in companies (Edelman Trust, 2018).…”

Section: Introductionmentioning

confidence: 99%

Improving accountability for farm animal welfare: the performative role of a benchmark device

McLaren

Appleyard

2019

AAAJ

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Purpose -The purpose of this paper is to investigate accountability for farm animal welfare (FAW) in food companies. FAW is an important social issue, yet it is difficult to define and measure, meaning that it is difficult for companies to demonstrate accountability. We investigate a proposed solution, the Business Benchmark on Farm Animal Welfare (BBFAW), and how it has disrupted the informal rules or culture of the market. Our research questions centre on the process of response to BBFAW and the necessary characteristics for BBFAW to play a performative role in the market. Design/methodology/approach -This paper employs an analysis of published BBFAW reports (2012)(2013)(2014)(2015)(2016)(2017) and case study interviews in five BBFAW firms, in order to address the research questions. Findings -We present evidence of a dynamic, repetitive process, starting with recognition of the importance of FAW and BBFAW, followed by internal discussions and the commitment of resources, and changes in communication to external stakeholders. Three necessary characteristics for performativity are proposed: common language, building networks and expanding markets. Originality/value -This paper reflects a socially important issue that is underrepresented in the accounting literature. The results provide an insight into the use of external accounts to drive collaboratively the social change agenda. The performativity process and identified characteristics contribute to expanding this literature in the accounting domain.

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Do institutional investors drive corporate social responsibility? International evidence

Cited by 1,355 publications

References 36 publications

Do Investors Value Sustainability? A Natural Experiment Examining Ranking and Fund Flows

Do Investors Value Sustainability? A Natural Experiment Examining Ranking and Fund Flows

The role of directors representing institutional ownership in sustainable development through corporate social responsibility reporting

Improving accountability for farm animal welfare: the performative role of a benchmark device

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