We propose a conceptual framework to illustrate that when three conditions hold, institutional investors moderate a positive relation between corporate financial performance and corporate environmental performance. We explore heterogeneities across institution types to demonstrate the importance of each condition. The moderating effect works through the channels of expert consulting and effective monitoring. Our results have important policy and practical implications given the global trend of ownership concentration in institutional investors and the projection that by 2025, one out of three dollars under professional management will be invested in corporate social responsibility assets.

We study the patterns of insider trading surrounding pension freezes, a widespread corporate event that creates firm value and generates positive abnormal returns. We find that insiders-particularly nonsenior executive insiders (rather than senior executive insiders) and opportunistic traders (rather than routine traders)effectively increase their net purchases by reducing their sales of company stocks 1 year before pension freezes. Such passive insider trading does not appear to be driven by liquidity needs or portfolio choices.Overall, our findings highlight the heterogeneity of insiders and limitation of existing insider trading regulations, calling for policy makers' attention to this insider behavior.

This study examines the relation between employee incentives and corporate innovation. We find that firms with a higher defined benefit (DB) pension value secure more patents and patent citations. We further show that pension freezes, which stop the accumulation of pension obligations, negatively affect innovation outcomes. The value of a DB plan enhances innovation by motivating employees to produce higher output and through loyalty. However, pension deficits impede innovation because of the nature of inside debt. Overall, our findings call for a fresh look at pensions by policy makers and practitioners, given the historic shift away from DB plans.

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