Engaging Employees for the Long Run: Long-Term Investors and Employee-Related CSR

Alexandre Garel () and Arthur Petit-Romec ()
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Alexandre Garel: Audencia Business School
Arthur Petit-Romec: TBS Business School

Journal of Business Ethics, 2021, vol. 174, issue 1, No 3, 35-63

Abstract: Abstract This article explores whether and how long-term investors influence non-executive employees’ incentives. While long-term investors benefit from long-term investments that create value over time, employees tend to be averse to long-term investments. We conjecture that long-term investors foster employee-related CSR to motivate employees to engage in long-term investment projects. Consistent with this prediction, we find that long-term investor ownership is a strong driver of employee-related CSR. Additional analyses indicate that this result is not driven by self-selection or reverse causality. We further show that employee-related CSR leads to increased long-term investments (R&D expenses and corporate innovation). Overall, our findings highlight that employee-related CSR is an important channel through which long-term investors encourage long-term investments.

Keywords: Corporate social responsibility; Employee governance; Investment decisions; Institutional investors (search for similar items in EconPapers)
JEL-codes: G23 G32 M14 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (8)

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DOI: 10.1007/s10551-020-04572-8

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