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Common institutional ownership and corporate social responsibility

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  • Cheng, Xin
  • (Helen) Wang, He
  • Wang, Xianjue

Abstract

We examine relationship between common institutional ownership and corporate social responsibility (CSR). We find that common institutional ownership is negatively associated with the level of CSR, which supports an anti-competitive view. We conduct a propensity score matching (PSM) analysis and a difference-in-differences (DiD) analysis based on a quasi-natural experiment of financial institution mergers. The results alleviate concerns about endogeneity. Using the DiD setting, we find further support for the anti-competitive view, and can rule out alternative explanations. Additional analyses on investor characteristics show that our results come mainly from common owners with long-term investment horizons or lower social inclination. Moreover, we find that the anti-competitive effect is more pronounced for mature firms, and for firms in industries with lower labor intensity and lower customer sensitivity.

Suggested Citation

  • Cheng, Xin & (Helen) Wang, He & Wang, Xianjue, 2022. "Common institutional ownership and corporate social responsibility," Journal of Banking & Finance, Elsevier, vol. 136(C).
    • Handle: RePEc:eee:jbfina:v:136:y:2022:i:c:s0378426621001771
    DOI: 10.1016/j.jbankfin.2021.106218
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    Cited by:

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    5. Luo, Yi & Ma, Jian & Wang, Yu & Ye, Aishan, 2022. "Board internationalization and corporate social responsibility," The North American Journal of Economics and Finance, Elsevier, vol. 63(C).
    6. Zhou, Chensong & Zhang, Xiangzhi & Xiong, Lingyun & Chen, Chuanyong, 2023. "Merger and acquisition performance commitments and shareholding reductions," Finance Research Letters, Elsevier, vol. 57(C).
    7. Jingtai Wu & Xinyi Cai & Fei Zuo & Yue Dong, 2023. "Study on the Impact of Common Institutional Ownership on Corporate Green Transformation in the Context of “Dual Carbon”: Evidence from China," Sustainability, MDPI, vol. 15(15), pages 1-20, August.
    8. Safiullah, Md & Alam, Md Samsul & Islam, Md Shahidul, 2022. "Do all institutional investors care about corporate carbon emissions?," Energy Economics, Elsevier, vol. 115(C).

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    More about this item

    Keywords

    Common institutional ownership; Corporate social responsibility (CSR); Institutional investors;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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