Is Institutional Ownership Related to Corporate Social Responsibility? The Nonlinear Relation and Its Implication for Stock Return Volatility

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This study examines the relation between corporate social responsibility (CSR) and institutional investor ownership, and the impact of this relation on stock return volatility. We find that institutional ownership does not strictly increase or decrease in CSR; rather, institutional ownership is a concave function of CSR. This evidence suggests that institutional investors do not see CSR as strictly value-enhancing activities. Institutional investors adjust their percentage of ownership when CSR activities go beyond the perceived optimal level. Employing the path analysis, we also examine the mediating effect of institutional ownership on the relation between CSR and stock return volatility. We find that CSR decreases stock return volatility at a decreasing rate through its effect on institutional ownership. Our results remain robust under several different CSR measures and estimation methods.
Publisher
SPRINGER
Issue Date
2017-11
Language
English
Article Type
Article
Keywords

FIRM FINANCIAL PERFORMANCE; INVESTOR PREFERENCES; RISK-MANAGEMENT; EARNINGS; DISCLOSURE; BEHAVIOR; EQUITY; COST; INFORMATION; PHILANTHROPY

Citation

JOURNAL OF BUSINESS ETHICS, v.146, no.1, pp.77 - 109

ISSN
0167-4544
DOI
10.1007/s10551-015-2883-y
URI
http://hdl.handle.net/10203/244337
Appears in Collection
MT-Journal Papers(저널논문)
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