Shifting Stakeholders Logics: Foreign Institutional Ownership and Corporate Social Responsibility

Xu Cheng (), Xiandeng Jiang (), Dongmin Kong () and Samuel Vigne ()
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Xu Cheng: Central South University
Xiandeng Jiang: Southwestern University of Finance and Economics
Dongmin Kong: Huazhong University of Science and Technology
Samuel Vigne: LUISS Business School

Journal of Business Ethics, 2024, vol. 194, issue 1, No 9, 165-183

Abstract: Abstract This study examines the role of foreign institutional ownership in corporate social responsibility (CSR). Using the Shanghai-Hong Kong Stock Connect as a quasi-natural experiment, our difference-in-differences estimation shows that foreign institutional ownership drives firms’ CSR corporate social responsibility. Further, the positive effect of foreign institutional ownership on CSR is motivated by foreign institutional investors shifting the stakeholders’ logics about social responsibility, not by profit maximization. We also provide evidence that this effect of foreign institutional ownership on CSR is more pronounced among firms with fewer political connections and with non-overconfident CEOs. Overall, our results indicate that foreign institutional investors transmit social norms and shift stakeholders’ logics regarding social responsibility and, in turn, propel firms to improve CSR to satisfy their stakeholders’ expectations.

Keywords: Foreign institutional ownership; Corporate social responsibility; Social transmission; China (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10551-023-05587-7

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