How Shareholders Impact Stakeholder Interests: A Review and Map for Future Research

Abstract

Research on how shareholders influence the interests of stakeholders has proliferated in recent years, at pace with the active debate on the merits of “stakeholder capitalism.” This research has sought to unpack: (1) the types of shareholders that affect stakeholder-relevant firm outcomes, (2) the mechanisms through which shareholders exert their influence on stakeholders’ interests, (3) the types of stakeholders that are influenced by shareholders, and (4) the factors that moderate the influence of shareholders on stakeholder-relevant firm outcomes. However, this literature is highly fragmented, as it spans the boundaries of various disciplines, draws on different theoretical frameworks, and is based on diverse assumptions. Moreover, exsiting research discusses outcome variables that are relevant to stakeholders, but not from the perspective of stakeholder interests. A comprehensive review of the literature is essential for understanding the heterogeneity of shareholders in terms of their impact on other stakeholders. In the absence of such an endeavor, we systematically review, synthesize, interpret, and critique literature published over the past three decades in leading management, sociology, finance, and accounting journals. Focusing on articles about how shareholders influence stakeholder interests through firms' decisions and outcomes, we chart a promising path for future studies to more fully unpack the complex relationships between shareholders and various other stakeholders.

Common institutional ownership and stock price crash risk

“…Despite the rapid expansion of this literature, existing studies largely focus on the impact of common ownership on product market outcomes and firm policies (e.g., Azar et al, 2018;S. Chen et al, 2023;DesJardine et al, 2022DesJardine et al, , 2023Ramalingegowda et al, 2021). Our study complements and extends this literature by focusing on stock market outcomes and shedding light on one more economic benefit of common ownership-the reduction in stock price crash risk, which is an important consideration for investors.…”

The New Invisible Hand: How Common Owners Use the Media as a Strategic Tool

“…As common ownership has become the norm among institutional investors, scholars have exerted considerable effort to unpack how this structural change in the investment industry is shaping corporate practices and priorities (DesJardine, Grewal, and Viswanathan, 2022; DesJardine, Zhang, and Shi, 2023). The general conclusion is that by owning multiple firms in the same industry, investors with common ownership occupy an advantageous position from which they can coordinate firms’ actions to their own avail.…”

Balancing acts: The relationship between corporate environmental irresponsibility, charitable donations, and financial performance

“…They serve as an effective supplementary mechanism for conveying social responsibility information to the capital market (DesJardine et al, 2023). CEIR, which centers on negative and general environment-related information of firms, may not capture the attention of analysts as more conspicuous or sensational environmental violations; it may even go entirely unnoticed by analysts.…”

“…Therefore, they typically do not alter their donation plans due to short‐term fluctuations in performance. CD effectively showcase the corporate's responsibility and product reliability, leaving a strong positive impression on stakeholders (DesJardine et al, 2023; Du, Jian, Du, et al, 2014). This allows firms to establish brand reputation, enhance product reliability, and bolster firm reputation (Zeng, Ran, et al, 2022).…”

“…As mentioned above, analysts play an important role as “information‐interpreters” of the capital market by exploring and elucidating corporate responsibility behavior, including environment‐related information, to meet the information needs of stakeholders. They serve as an effective supplementary mechanism for conveying social responsibility information to the capital market (DesJardine et al, 2023). CEIR, which centers on negative and general environment‐related information of firms, may not capture the attention of analysts as more conspicuous or sensational environmental violations; it may even go entirely unnoticed by analysts.…”