The impact of corporate governance on corporate social performance: Cases from listed firms in Taiwan

From the perspective of the agency problem, we explore how corporate governance affects corporate social performance (CSR performance) with a special focus on the role of inside and outside block shareholders. The empirical results from listed firms in Taiwan show that controlling owners having entrenched control, as manifested in CEO/chairman duality and family control, are less inclined to engage in CSR. Moreover, inside block shareholders (including large shareholders and directors) with higher shareholding are also less motivated to engage in CSR. By contrast, outside block holders, including foreign institutional shareholders and domestic institutional shareholders, enhance monitoring effectiveness and therefore encourage firms to engage in CSR. Furthermore, board independence is also positively correlated with CSR performance. Finally, CSR performance is positively correlated with firm's ROA.