Abstract
This paper examines how the investment horizons of a firm's institutional investors affect its corporate social responsibility (CSR) activities. Using data on U.S. firms’ CSR ratings over the 1995–2012 period, we find that longer investment horizons are positively related to CSR. Further, active long-term institutions increase CSR whereas passive long-term institutions have no significant effect. Our results suggest that investors with long-term horizons have more incentives to monitor their firms which leads managers to engage in more vigorous CSR activities.
Original language | English |
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Pages (from-to) | 256-269 |
Number of pages | 14 |
Journal | Journal of Banking and Finance |
Volume | 101 |
DOIs | |
State | Published - Apr 2019 |
Keywords
- Corporate social responsibility (CSR)
- Institutional investor
- Investment horizon
- Monitoring incentive