Why do institutions like corporate social responsibility investments? evidence from horizon heterogeneity

Fu, Xudong; Tang, Tian; Yan, Xinyan

doi:10.1016/j.jempfin.2019.01.010

Cited by 39 publications

(25 citation statements)

References 55 publications

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“…This finding supports the research Hypothesis (H1). These findings are similar to Fu et al (2019), who suggested that SR information delivers the social and environmental position of an organization to indicate apparent litigation risk, future economic and ecological obligations, and adverse information asymmetries. Thus, firms that disclose higher SR activities are likely to have a higher market value of equity paralleled to other concerns with inferior intensities in SR reporting in the banking sector of Bangladesh.…”

Section: Resultssupporting

confidence: 86%

Moderating Effect of Earnings Management in the Relationship between Sustainability Reporting Initiatives and Value Relevance

Rahman

Rasid

Basiruddin

2020

IJSAM

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The purpose of this study is to investigate whether sustainability disclosures are associated with value relevance in Bangladesh. The moderating effect of earnings management (EM) is also examined to observe the right direction in this relationship. Based on prior studies on sustainability disclosure and global reporting initiatives guidelines, this research uses the content analysis approach to assess the magnitude of sustainability initiatives of 30 Bangladeshi banking companies over the period 2009–2017. The Ohlson price model and discretionary accruals are also employed as measures of value relevant of sustainability disclosure and EM, respectively. The findings state that sustainability reports positively affect the equity value, whereas EM negatively moderates the direction of this association. The results also confirm that management should be responsive of the impending capital market effects of voluntary disclosures regarding sustainability issues. These findings could have several implications for banks, investors, and policymakers.

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Section: Resultssupporting

confidence: 86%

Moderating Effect of Earnings Management in the Relationship between Sustainability Reporting Initiatives and Value Relevance

Rahman

Rasid

Basiruddin

2020

IJSAM

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“…Environmental investments may lead to higher firm performance in the long run since environmentally irresponsible firms may be subject to punishment from stakeholders and government sanctions (Oh et al 2011;Calza et al 2016). In contrast to the low number of studies on content-driven, socially responsible investors, we recognize an increased amount of research on time-driven, long-term investors and their overall impact on environmental and social performance (e.g., Meng and Wang 2020;Erhemjamts and Huang 2019;Fu et al 2019;Gloßner 2019). Prior studies find that long-term investors, especially institutional investors, strengthen environmental and social performance based on US settings (Meng and Wang 2020;Erhemjamts and Huang 2019;Fu et al 2019;Gloßner 2019;Kim et al 2019a;Lamb and Butler 2018;Boubaker et al 2017;Neubaum and Zahra 2006).…”

Section: Time-driven Long-term Investors and Corporate Environmental Performancementioning

confidence: 96%

“…It seems that besides altruistic motives, investment horizon determines the financial advantageousness of environmental investments (Calza et al 2016). Based on prior research (e.g., Meng and Wang 2020;Erhemjamts and Huang 2019;Fu et al 2019) and the aforementioned agency theoretical arguments, it is not only socially responsible investors who have an incentive to promote environmental performance. Institutional investors with long-term investment horizons will also use those strategies.…”

Section: Time-driven Long-term Investors and Corporate Environmental Performancementioning

confidence: 99%

Do sustainable institutional investors contribute to firms’ environmental performance? Empirical evidence from Europe

Kordsachia¹,

Focke

Velte

2021

Rev Manag Sci

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In light of current climate change discussions, this paper analyzes the effect of ownership structure on a firm’s environmental performance with a subsequent focus on corporate emission reduction. Based on a cross-national European sample consisting of 7384 firm-year observations between 2008 and 2017, this study explores the relationship between sustainable institutional investors and environmental performance. In line with prior research and embedded in an agency theoretical framework, the nature of institutional investors may act as a stimulating driver towards green business practices. Sustainable institutional investors are defined based on their signatory status to the UN Principles for Responsible Investment and their (long-term) investment horizons. The first classification stems from a content-driven sustainability perspective, while the second is derived from temporal sustainability. The results indicate that sustainable institutional ownership is positively associated with a firm’s environmental performance. Further investigations reveal that sustainable institutional investor ownership is also positively associated with firms’ willingness to respond to the Carbon Disclosure Project. These results indicate a higher carbon-risk awareness in firms with greater sustainable institutional investor ownership. Our paper significantly contributes to prior empirical research on institutional ownership and environmental performance and offers useful theoretical and practical implications. It focusses on a still-underdeveloped research area, namely organizations and their relationships with the natural environment, including institutional equity ownership as a driver towards greener practices on a corporate level.

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“…CSR activities pay in the long run and short-term investors are not able to take the benefit of such investments (Gaspar et al, 2009). The process of reputation building by CSR activities is time taking and short-term- oriented investors are not able to get risk insurance type benefit from it (Diamond, 1989; Fu et al, 2019). The above-mentioned studies are done in the developed economies context and found a negative impact of mutual fund investors ownership on CSP.…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Institutional Ownership and Corporate Social Performance in Emerging Economies Multinationals: Evidence from India

Yadav

2020

Indian Journal of Corporate Governance

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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.

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Why do institutions like corporate social responsibility investments? evidence from horizon heterogeneity

Cited by 39 publications

References 55 publications

Moderating Effect of Earnings Management in the Relationship between Sustainability Reporting Initiatives and Value Relevance

Moderating Effect of Earnings Management in the Relationship between Sustainability Reporting Initiatives and Value Relevance

Do sustainable institutional investors contribute to firms’ environmental performance? Empirical evidence from Europe

Institutional Ownership and Corporate Social Performance in Emerging Economies Multinationals: Evidence from India

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