Do long-term institutional investors promote corporate social responsibility activities?

Hyun Dong Kim, Taeyeon Kim, Yura Kim, Kwangwoo Park

Research output: Contribution to journalArticlepeer-review

127 Scopus citations

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 languageEnglish
Pages (from-to)256-269
Number of pages14
JournalJournal of Banking and Finance
Volume101
DOIs
StatePublished - Apr 2019

Keywords

  • Corporate social responsibility (CSR)
  • Institutional investor
  • Investment horizon
  • Monitoring incentive

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