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The effect of institutional investors’ distraction on firms’ corporate social responsibility engagement: evidence from China

Cheng Xiang, Fengwen Chen, Paul Jones Orcid Logo, Senmao Xia

Review of Managerial Science, Volume: 15, Issue: 6, Pages: 1645 - 1681

Swansea University Author: Paul Jones Orcid Logo

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DOI (Published version): 10.1007/s11846-020-00387-z

Abstract

To investigate the impact of institutional investors on firms’ corporate social responsibility (CSR) engagement while controlling for possible endogeneity concerns, we study how Chinese listed firms adjust their CSR decisions when their institutional investors are distracted by exogenous attention-g...

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Published in: Review of Managerial Science
ISSN: 1863-6683 1863-6691
Published: Springer Science and Business Media LLC 2021
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URI: https://cronfa.swan.ac.uk/Record/cronfa54220
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first_indexed 2020-05-14T19:08:28Z
last_indexed 2021-08-02T03:12:04Z
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spelling 2021-08-01T19:00:45.7230616 v2 54220 2020-05-14 The effect of institutional investors’ distraction on firms’ corporate social responsibility engagement: evidence from China 21e2660aaa102fe36fc981880dd9e082 0000-0003-0417-9143 Paul Jones Paul Jones true false 2020-05-14 BBU To investigate the impact of institutional investors on firms’ corporate social responsibility (CSR) engagement while controlling for possible endogeneity concerns, we study how Chinese listed firms adjust their CSR decisions when their institutional investors are distracted by exogenous attention-grabbing events and thus are inattentive. With a sample of Chinese listed firms from 2009 to 2017, we find a significant and robust negative relationship between institutional investor inattention and firms’ CSR engagement. This negative relationship is more pronounced for firms with more principal–agent problems and/or weaker corporate governances and is more attributable to the inattention of institutional investors with more monitoring incentives. These findings suggest that managers are less motivated to engage in CSR when they are less monitored by institutional investors, indicating that CSR is beneficial to shareholders of Chinese listed firms. Our findings also indicate that the positive impact of institutional investors on CSR may be constrained by their limited attention. Journal Article Review of Managerial Science 15 6 1645 1681 Springer Science and Business Media LLC 1863-6683 1863-6691 Corporate social responsibility; Institutional investors; Limited attention; Principal–agent problem; China 1 8 2021 2021-08-01 10.1007/s11846-020-00387-z https://link.springer.com/article/10.1007/s11846-020-00387-z COLLEGE NANME Business COLLEGE CODE BBU Swansea University 2021-08-01T19:00:45.7230616 2020-05-14T13:12:54.5639143 Faculty of Humanities and Social Sciences School of Management - Business Management Cheng Xiang 1 Fengwen Chen 2 Paul Jones 0000-0003-0417-9143 3 Senmao Xia 4 54220__17232__4a140bfd471347728d46e02d259856fc.pdf Manuscript Proof.pdf 2020-05-14T13:17:41.8681605 Output 916894 application/pdf Accepted Manuscript true 2021-05-12T00:00:00.0000000 true English
title The effect of institutional investors’ distraction on firms’ corporate social responsibility engagement: evidence from China
spellingShingle The effect of institutional investors’ distraction on firms’ corporate social responsibility engagement: evidence from China
Paul Jones
title_short The effect of institutional investors’ distraction on firms’ corporate social responsibility engagement: evidence from China
title_full The effect of institutional investors’ distraction on firms’ corporate social responsibility engagement: evidence from China
title_fullStr The effect of institutional investors’ distraction on firms’ corporate social responsibility engagement: evidence from China
title_full_unstemmed The effect of institutional investors’ distraction on firms’ corporate social responsibility engagement: evidence from China
title_sort The effect of institutional investors’ distraction on firms’ corporate social responsibility engagement: evidence from China
author_id_str_mv 21e2660aaa102fe36fc981880dd9e082
author_id_fullname_str_mv 21e2660aaa102fe36fc981880dd9e082_***_Paul Jones
author Paul Jones
author2 Cheng Xiang
Fengwen Chen
Paul Jones
Senmao Xia
format Journal article
container_title Review of Managerial Science
container_volume 15
container_issue 6
container_start_page 1645
publishDate 2021
institution Swansea University
issn 1863-6683
1863-6691
doi_str_mv 10.1007/s11846-020-00387-z
publisher Springer Science and Business Media LLC
college_str Faculty of Humanities and Social Sciences
hierarchytype
hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Business Management{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Business Management
url https://link.springer.com/article/10.1007/s11846-020-00387-z
document_store_str 1
active_str 0
description To investigate the impact of institutional investors on firms’ corporate social responsibility (CSR) engagement while controlling for possible endogeneity concerns, we study how Chinese listed firms adjust their CSR decisions when their institutional investors are distracted by exogenous attention-grabbing events and thus are inattentive. With a sample of Chinese listed firms from 2009 to 2017, we find a significant and robust negative relationship between institutional investor inattention and firms’ CSR engagement. This negative relationship is more pronounced for firms with more principal–agent problems and/or weaker corporate governances and is more attributable to the inattention of institutional investors with more monitoring incentives. These findings suggest that managers are less motivated to engage in CSR when they are less monitored by institutional investors, indicating that CSR is beneficial to shareholders of Chinese listed firms. Our findings also indicate that the positive impact of institutional investors on CSR may be constrained by their limited attention.
published_date 2021-08-01T04:07:37Z
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score 11.037275

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