Skip to main content
SpringerLink
Log in

Institutional blockholders and corporate social responsibility

  • Original Article
  • Published:
Asian Business & Management Aims and scope Submit manuscript

Abstract

By analyzing the Korean market characterized by chaebol firms, we provide evidence for the effectiveness of institutional blockholders’ monitoring of firms’ engagement in corporate social responsibility (CSR) activities. Lagged institutional blockholder ownership has a significantly positive effect on an investee firm’s current CSR index, suggesting that institutional blockholders actively engage with firms’ CSR activities to improve these firms’ long-term prosperity and performance, primarily because these blockholders cannot sell their large holdings without eroding the values of their investments. Domestic institutional blockholders have a greater effect on CSR than foreign institutional blockholders have, although the latter blockholders are becoming increasingly influential.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Similar content being viewed by others

Notes

  1. We recognize that firms may simultaneously adopt socially responsible policies and attract more institutional blockholders. To assess this potential endogeneity issue, we conduct an additional test, the findings of which are discussed in the empirical analysis section.

  2. Ensuring that institutional investors have sufficient disciplinary power is a necessary condition for examining their influence on CSR activities. Thus, we only consider blockholders with aggregate ownership of a minimum of 5% of a firm’s shares. Then, we examine how the K_CSR score reacts to incremental changes in blockholders’ shareholdings.

  3. One-year lead-lag analysis is commonly used to mitigate simultaneity (e.g., Jo and Harjoto 2011, 2012). However, because the influence of institutional blockholders may take time to be reflected in CSR engagement, we re-estimate the main models based on 2- and 3-year lead-lag relationships. However, we still find significant, positive relationships between 2- and 3-year lagged institutional blockholdings and K_CSR. Thus, our main results are not necessarily affected by the simultaneity issue and complement the robustness test results shown in Table 9. However, we find that this relationship is weaker for the three-year lead-lag relationship. This difference could arise because more factors and information may affect CSR activities over three years than over two years. Moreover, corporate spending on CSR might not be determined by management three years ahead. Planning one or two years ahead seems more reasonable. The robustness test results are available upon request.

  4. Note that D_IBO and F_IBO can replace IBO in Eq. (1).

  5. To address the potential endogeneity problem stemming from chaebol-affiliated firms’ voluntary engagement in CSR activities to attract institutional blockholders, we conduct an endogeneity test. Specifically, we re-estimate Table 4 for chaebol-affiliated firms in the lowest CSR quartile. This approach helps to mitigate the potential endogeneity issue because we focus on chaebol-affiliated firms with a low level of CSR activities. Specifically, we identify these chaebol-affiliated firms using annual announcements by the Korea Fair Trade Commission. The results show that institutional blockholdings positively affect CSR activities even after we restrict the sample to chaebol-affiliated firms with low CSR engagement, suggesting that our results are robust to any endogeneity issue. The test results are available upon request.

  6. To consider the possible loss of information due to the empirical setup using subsamples, we re-estimate the relevant tables using the interaction terms as complements. In particular, we utilize dummy variables for firm illiquidity and R&D expenses that take a value of one if a firm is in the top half of firms in terms of the Amihud (2002) illiquidity ratio and R&D expenses, respectively, in each year. Then, we construct interaction terms for these dummies and institutional blockholdings. The results show that the coefficients on both interaction terms are significant and positive, suggesting that institutional blockholders’ influence over CSR activities is more evident for firms with low liquidities and high R&D expenses. Thus, the findings of this analysis corroborate and complement those based on the subsample analyses reported in Table 7. The results are available upon request.

  7. Institutional investors have heterogeneous resources and motivations for committing themselves to monitoring (Chen et al. 2007). Thus, a long-term (short-term) investment strategy is believed to indicate a high (low) likelihood of an investor being a monitoring institution. Based on Yan and Zhang (2009), we use institutional blockholdings with different investment horizons to estimate the relationships between short- and long-term institutional blockholdings and CSR activities. The results are consistent with the findings of related studies (e.g., Chung et al. 2015; Liu et al. 2018; Chung et al. forthcoming). Long-term institutional blockholders seem to be more interested in CSR activities because only long-term institutional blockholders exhibit a positive and significant relationship with CSR activities. This finding also implies that realizing the benefits of CSR activities takes time and, thus, that this time interval is more aligned with the investment horizons of long-term institutional blockholders, who seek larger gains over a longer period.

  8. We choose the control variables by following Bushee and Noe (2000) and Bushee (2001). We include market-adjusted buy-and-hold returns (MRET), trading volumes (TVOL), betas from the market model (BETA), firm size (SIZE), financial leverage (LEV), income levels (EP), book-to-market ratios (BM), dividend payouts (DIVR), a market indicator dummy (MARKET_D), common shares outstanding (SHOUT), firm age (AGE), and R&D expenditures (RNDS) in the regression models, and we estimate them based on Petersen (2009). The control variables are described in detail in the Appendix.

References

  • Aggarwal, R., Erel, I., Ferreira, M., & Matos, P. (2011). Does governance travel around the world? Evidence from institutional investors. Journal of Financial Economics, 100(1), 154–181.

    Google Scholar 

  • Amihud, Y. (2002). Illiquidity and stock returns: Cross-section and time-series effects. Journal of Financial Markets, 5(1), 31–56.

    Google Scholar 

  • Arora, P., & Dharwadkar, R. (2011). Corporate governance and corporate social responsibility (CSR): The moderating roles of attainment discrepancy and organization slack. Corporate Governance: An International Review, 19(2), 136–152.

    Google Scholar 

  • Ayers, B. C., Ramalingegowda, S., & Yeung, P. E. (2011). Hometown advantage: The effects of monitoring institution location on financial reporting discretion. Journal of Accounting and Economics, 52(1), 41–61.

    Google Scholar 

  • Bae, K. H., Kang, J. K., & Kim, J. M. (2002). Tunneling or value added? Evidence from mergers by Korean business groups. Journal of Finance, 57(6), 2695–2740.

    Google Scholar 

  • Baek, J. S., Kang, J. K., & Lee, I. (2006). Business groups and tunneling: Evidence from private securities offerings by Korean chaebols. Journal of Finance, 61(5), 2415–2449.

    Google Scholar 

  • Baek, J. S., Kang, J. K., & Park, K. S. (2004). Corporate governance and firm value: Evidence from the Korean financial crisis. Journal of Financial Economics, 71(2), 265–313.

    Google Scholar 

  • Barnea, A., & Rubin, A. (2010). Corporate social responsibility as a conflict between shareholders. Journal of Business Ethics, 97(1), 71–86.

    Google Scholar 

  • Baughn, C. C., Bodie, N. L., & McIntosh, J. C. (2007). Corporate social and environmental responsibility in Asian countries and other geographical regions. Corporate Social Responsibility and Environmental Management, 14(4), 189–205.

    Google Scholar 

  • Bennett, J. A., Sias, R. W., & Starks, L. T. (2003). Greener pastures and the impact of dynamic institutional preferences. Review of Financial Studies, 16(4), 1203–1238.

    Google Scholar 

  • Bhide, A. (1993). The hidden costs of stock market liquidity. Journal of Financial Economics, 34(1), 31–51.

    Google Scholar 

  • Brickley, J. A., Lease, R. C., & Smith, C. W. (1988). Ownership structure and voting on antitakeover amendments. Journal of Financial Economics, 20(1–2), 267–291.

    Google Scholar 

  • Brine, M., Brown, R., & Hackett, G. (2007). Corporate social responsibility and financial performance in the Australian context (pp. 47–58). Autumn: Economic Round-up.

    Google Scholar 

  • Burke, L., & Logsdon, J. M. (1996). How corporate social responsibility pays off. Long-Range Planning, 29(4), 495–502.

    Google Scholar 

  • Bushee, B. J. (1998). The influence of institutional investors on myopic R&D investment behavior. Accounting Review, 73(3), 305–333.

    Google Scholar 

  • Bushee, B. (2001). Do institutional investors prefer near-term earnings over long-run value? Contemporary Accounting Research, 18(2), 207–246.

    Google Scholar 

  • Bushee, B., & Noe, C. (2000). Corporate disclosure practices, institutional investors, and stock return volatility. Journal of Accounting Research, 38(Supplement), 171–202.

    Google Scholar 

  • Cameron, A. C., Gelbach, J. B., & Miller, D. L. (2011). Robust inference with multiway clustering. Journal of Business & Economic Statistics, 29(2), 238–249.

    Google Scholar 

  • Campbell, J. L. (2007). Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Academy of Management Review, 32(3), 946–967.

    Google Scholar 

  • Carleton, W. T., Nelson, J. A., & Weisbach, M. S. (1998). The influence of institutions on corporate governance through private negotiations: Evidence from TIAA-CREF. Journal of Finance, 53(4), 1335–1362.

    Google Scholar 

  • Carpenter, M. A., & Sanders, W. G. (2004). The effects of top management team pay and firm internationalization on MNC performance. Journal of Management, 30(4), 509–528.

    Google Scholar 

  • Chang, S. J. (2003). Ownership structure, expropriation, and performance of group-affiliated companies in Korea. Academy of Management Journal, 46(2), 238–253.

    Google Scholar 

  • Chang, S. J., & Hong, J. (2000). Economic performance of group-affiliated companies in Korea: Intragroup resource sharing and internal business transactions. Academy of Management Journal, 43(3), 429–448.

    Google Scholar 

  • Chapple, W., & Moon, J. (2005). Corporate social responsibility (CSR) in Asia: A seven-country study of CSR web site reporting. Business & Society, 44(4), 415–441.

    Google Scholar 

  • Chen, X., Harford, J., & Li, K. (2007). Monitoring: Which institutions matter? Journal of Financial Economics, 86(2), 279–305.

    Google Scholar 

  • Cheung, Y. L., Tan, W., Ahn, H.-J., & Zhang, Z. (2010). Does corporate social responsibility matter in Asian emerging markets? Journal of Business Ethics, 92(3), 401–413.

    Google Scholar 

  • Chhaochharia, V., Kumar, A., & Niessen-Ruenzi, A. (2012). Local investors and corporate governance. Journal of Accounting Research, 54(1), 42–67.

    Google Scholar 

  • Cho, E., Chun, S., & Choi, D. (2015). International diversification, corporate social responsibility, and corporate governance: Evidence from Korea. Journal of Applied Business Research, 31(2), 743–794.

    Google Scholar 

  • Cho, S. J., Chung, C. Y., & Liu, C. (forthcoming). Does institutional blockholder short-termism lead to managerial myopia? Evidence from income smoothing. International Review of Finance.

  • Choi, S., & Aguilera, R. V. (2009). CSR dynamics in South Korea and Japan: A comparative analysis. In C. Mallin (Ed.), Corporate social responsibility: A case study approach (pp. 123–147). New York: Edward Elgar Publishing Ltd.

    Google Scholar 

  • Choi, J., Jo, H., Kim, J., & Kim, M. (forthcoming). Business groups and corporate social responsibility. Journal of Business Ethics, in press.

  • Choi, B. B., Lee, D., & Park, Y. (2013). Corporate social responsibility, corporate governance and earnings quality: Evidence form Korea. Corporate Governance: An International Review, 21(5), 447–467.

    Google Scholar 

  • Chung, R., Firth, M., & Kim, J. (2002). Institutional monitoring and opportunistic earnings management. Journal of Corporate Finance, 8(1), 29–48.

    Google Scholar 

  • Chung, C.Y., Hur, S.K., & Liu, C. (forthcoming). Institutional investors and cost stickiness: Theory and Evidence. North American Journal of Economics and Finance.

  • Chung, C. Y., Jung, S., & Young, J. (2018a). Do CSR activities increase firm value? Evidence from the Korean market. Sustainability, 10(9), 1–22.

    Google Scholar 

  • Chung, C. Y., Kang, S., & Ryu, D. (2018b). Does institutional monitoring matter? Evidence from insider trading by information risk level. Investment Analysts Journal, 47(1), 48–64.

    Google Scholar 

  • Chung, C. Y., & Liu, C. (2017). Institutional investors and opportunistic seasoned equity offerings in the Korean stock market. Applied Economics, 49(5), 446–455.

    Google Scholar 

  • Chung, C. Y., Liu, C., & Wang, K. (2018c). Do firms have target capital structures? Evidence from institutional monitoring. International Review of Economics and Finance, 58(1), 65–77.

    Google Scholar 

  • Chung, C. Y., Liu, C., Wang, K., & Zykaj, B. B. (2015). Institutional monitoring: Evidence from the F-Score. Journal of Business Finance & Accounting, 42(7–8), 885–914.

    Google Scholar 

  • Chung, C. Y., & Wang, K. (2014). Do institutional investors monitor management? Evidence from the relationship between institutional ownership and capital structure. North American Journal of Economics and Finance, 30(1), 203–233.

    Google Scholar 

  • Coffee, J. C. (1991). Liquidity versus control: The institutional investor as corporate monitor. Columbia Law Review, 91(6), 1277–1368.

    Google Scholar 

  • Coffey, B. S., & Fryxell, G. E. (1991). Institutional ownership of stock and dimensions of corporate social performance: An empirical examination. Journal of Business Ethics, 10(6), 437–444.

    Google Scholar 

  • Cumming, D., Filatotchev, I., Knill, A., Reeb, D. M., & Senbet, L. (2017). Law, finance, and the international mobility of corporate governance. Journal of International Business Studies, 48(2), 123–147.

    Google Scholar 

  • Dam, L., & Scholtens, B. (2012). Does ownership type matter for corporate social responsibility? Corporate Governance: An International Review, 20(3), 233–252.

    Google Scholar 

  • Del Guercio, D., & Hawkins, J. (1999). The motivation and impact of pension fund activism. Journal of Financial Economics, 52(3), 293–340.

    Google Scholar 

  • Del Guercio, D., & Tran, H. (2012). Institutional investor activism. In H. K. Baker & J. R. Nofsinger (Eds.), Socially responsible finance and investing (pp. 359–380). New Jersey: Wiley.

    Google Scholar 

  • Deng, X., Kang, J. K., & Low, B. S. (2013). Corporate social responsibility and stakeholder value maximization: Evidence from mergers. Journal of Financial Economics, 110(1), 87–109.

    Google Scholar 

  • Dimson, E., Karakaş, O., & Li, X. (2015). Active ownership. Review of Financial Studies, 28(12), 3225–3268.

    Google Scholar 

  • Dyck, A., Lins, K.V., Roth, L., & Wagner, H.F. (Forthcoming). Do institutional investors drive corporate social responsibility? International evidence. Journal of Financial Economics.

  • Edmans, A. (2011). Does the stock market fully value intangibles? Employee satisfaction and equity prices. Journal of Financial Economics, 101(3), 621–640.

    Google Scholar 

  • El Ghoul, S., Guedhami, O., Kwok, C. C., & Mishra, D. R. (2011). Does corporate social responsibility affect the cost of capital? Journal of Banking & Finance, 35(9), 2388–2406.

    Google Scholar 

  • Ferreira, M. A., Massa, M., & Matos, P. (2010). Shareholders at the gate? Institutional investors and cross-border mergers and acquisitions. Review of Financial Studies, 23(2), 601–644.

    Google Scholar 

  • Ferrell, A., Liang, H., & Renneboog, L. (2016). Socially responsible firms. Journal of Financial Economics, 112(3), 585–606.

    Google Scholar 

  • Flammer, C. (2015). Does corporate social responsibility lead to superior financial performance? A regression discontinuity approach. Management Science, 61(11), 2549–2568.

    Google Scholar 

  • Freeman, R. E. (2010). Strategic management: A stakeholder approach. Cambridge: Cambridge University Press.

    Google Scholar 

  • Gillan, S. L., & Starks L. T. (2003). Corporate governance, corporate ownership, and the role of institutional investors: A global perspective. Weinberg Center for Corporate Governance Working Paper No. 2003–01.

  • Gillan, S. L., & Starks, L. T. (2000). Corporate governance proposals and shareholder activism: The role of institutional investors. Journal of Financial Economics, 57(2), 275–305.

    Google Scholar 

  • Gompers, P. A., & Metrick, A. (2001). Institutional investors and equity prices. Quarterly Journal of Economics, 116(1), 229–259.

    Google Scholar 

  • Graves, S. B., & Waddock, S. A. (1994). Institutional owners and corporate social performance. Academy of Management Journal, 37(4), 1034–1046.

    Google Scholar 

  • Grinstein, Y., & Michaely, R. (2005). Institutional holdings and payout policy. Journal of Finance, 60(3), 1389–1426.

    Google Scholar 

  • Hall, B. H. (2000). Innovation and market value. In R. Barrell, G. Mason, & M. O’Mahoney (Eds.), Productivity, innovation and economic performance (pp. 177–198). Cambridge: Cambridge University.

    Google Scholar 

  • Hartzell, J. C., & Starks, L. T. (2003). Institutional investors and executive compensation. Journal of Finance, 58(6), 2351–2374.

    Google Scholar 

  • Hitt, M. A., Hoskisson, R. E., Johnson, R. A., & Moesel, D. D. (1996). The market for corporate control and firm innovation. Academy of Management Journal, 39(5), 1084–1119.

    Google Scholar 

  • Hong, Y., & Andersen, M. L. (2011). The relationship between corporate social responsibility and earnings management: An exploratory study. Journal of Business Ethics, 104(4), 461–471.

    Google Scholar 

  • Hong, H., & Kacperczyk, M. (2009). The price of sin: The effects of social norms on markets. Journal of Financial Economics, 93(1), 15–36.

    Google Scholar 

  • Hong, H., Kubik, J. D., & Scheinkman, J. A. (2012). Financial constraints on corporate goodness (No. w18476). National Bureau of Economic Research.

  • Janakiraman, S., Radhakrishnan, S., & Tsang, A. (2010). Institutional investors, managerial ownership, and executive compensation. Journal of Accounting, Auditing & Finance, 25(4), 673–707.

    Google Scholar 

  • Janney, J. J., & Gove, S. (2011). Reputation and corporate social responsibility aberrations, trends, and hypocrisy: Reactions to firm choices in the stock option backdating scandal. Journal of Management Studies, 48(7), 1562–1585.

    Google Scholar 

  • Jo, H., & Harjoto, M. A. (2011). Corporate governance and firm value: The impact of corporate social responsibility. Journal of Business Ethics, 103(3), 351–383.

    Google Scholar 

  • Jo, H., & Harjoto, M. A. (2012). The causal effect of corporate governance on corporate social responsibility. Journal of Business Ethics, 106(1), 53–72.

    Google Scholar 

  • Johnson, S., Boone, P., Breach, A., & Friedman, E. (2000). Corporate governance in the Asian financial crisis. Journal of Financial Economics, 58(1), 141–186.

    Google Scholar 

  • Johnson, R. A., & Greening, D. W. (1999). The effects of corporate governance and institutional ownership types on corporate social performance. Academy of Management Journal, 42(5), 564–576.

    Google Scholar 

  • Kaplan, S. N., & Zingales, L. (1997). Do investment-cash flow sensitivities provide useful measures of financing constraints? Quarterly Journal of Economics, 112(1), 169–215.

    Google Scholar 

  • Kim, C. H., Amaeshi, K., Harris, S., & Suh, C. J. (2013). CSR and the national institutional context: The case of South Korea. Journal of Business Research, 66(12), 2581–2591.

    Google Scholar 

  • Kim, I., Miller, S., Wan, H., & Wang, B. (2016). Drivers behind the monitoring effectiveness of global institutional investors: Evidence from earnings management. Journal of Corporate Finance, 40, 24–46.

    Google Scholar 

  • Kim, H., Park, K., & Ryu, D. (2017). Corporate environmental responsibility: A legal origins perspective. Journal of Business Ethics, 140(3), 381–402.

    Google Scholar 

  • Laverty, K. J. (1996). Economic “short-termism”: The debate, the unresolved issues, and the implications for management practice and research. Academy of Management Review, 21(3), 825–860.

    Google Scholar 

  • Lazonick, W., & O’Sullivan, M. (2000). Maximizing shareholder value: A new ideology for corporate governance. Economy and Society, 29(1), 13–35.

    Google Scholar 

  • Liang, H., & Renneboog, L. (2017). On the foundations of corporate social responsibility. Journal of Finance, 72(2), 853–910.

    Google Scholar 

  • Liu, C., Chung, C. Y., Sul, H. K., & Wang, K. (2018). Does hometown advantage matter? The case of institutional blockholder monitoring on earnings management in Korea. Journal of International Business Studies, 49(2), 196–221.

    Google Scholar 

  • Mahapatra, S. (1984). Investor reaction to a corporate social accounting. Journal of Business Finance & Accounting, 11(1), 29–40.

    Google Scholar 

  • Marquis, C., & Qian, C. (2014). Corporate social responsibility reporting in China: Symbol or substance? Organization Science, 25(1), 127–148.

    Google Scholar 

  • Maug, E. (1998). Large shareholders as monitors: Is there a trade-off between liquidity and control? The Journal of Finance, 53(1), 65–98.

    Google Scholar 

  • McWilliams, A., & Siegel, D. (2001). Profit maximizing corporate social responsibility. Academy of Management Review, 26(4), 504–505.

    Google Scholar 

  • Miller, D., Le Breton-Miller, I., & Scholnick, B. (2008). Stewardship vs. stagnation: An empirical comparison of small family and non-family businesses. Journal of Management Studies, 45(1), 51–78.

    Google Scholar 

  • Nam, Y. S., & Jun, H. (2011). The shaping of corporate social responsibility in Korea’s economic development. Global Journal of Business Management and Accounting, 1(1), 10–20.

    Google Scholar 

  • Nicolas, F., Thomsen S., & Bang, M. (2013). Lessons from Investment Policy Reform in Korea. OECD Working Papers on International Investment (No. 2013/02), OECD Publishing.

  • O’Barr, W. M., Conley, J. M., & Brancato, C. K. (1992). Fortune and folly: The wealth and power of institutional investing. Illinois: Irwin Professional Publications.

    Google Scholar 

  • Officer, M. S. (2011). Overinvestment, corporate governance, and dividend initiations. Journal of Corporate Finance, 17(3), 710–724.

    Google Scholar 

  • Oh, W. Y., Chang, Y. K., & Martynov, A. (2011). The effect of ownership structure on corporate social responsibility: Empirical evidence from Korea. Journal of Business Ethics, 104(2), 283–297.

    Google Scholar 

  • Parrino, R., Sias, R. W., & Starks, L. T. (2003). Voting with their feet: Institutional ownership changes around forced CEO turnover. Journal of Financial Economics, 68(1), 3–46.

    Google Scholar 

  • Petersen, M. A. (2009). Estimating standard errors in finance panel data sets: Comparing approaches. Review of Financial Studies, 22(1), 435–480.

    Google Scholar 

  • Prior, D., Surroca, J., & Tribó, J. A. (2008). Are socially responsible managers really ethical? Exploring the relationship between earnings management and corporate social responsibility. Corporate Governance: An International Review, 16(3), 160–177.

    Google Scholar 

  • Reed, A. M. (2002). Corporate governance reforms in India. Journal of Business Ethics, 37(3), 249–268.

    Google Scholar 

  • Ryu, D., Ryu, D., & Hwang, J. H. (2016). Corporate social responsibility, market competition, and shareholder wealth. Investment Analysts Journal, 45(1), 16–30.

    Google Scholar 

  • Ryu, D., Ryu, D., & Hwang, J. H. (2017). Corporate governance, product-market competition, and stock returns: Evidence from the Korean market. Asian Business & Management, 16(1–2), 50–91.

    Google Scholar 

  • Servaes, H., & Tamayo, A. (2013). The impact of corporate social responsibility on firm value: The role of customer awareness. Management Science, 59(5), 1045–1061.

    Google Scholar 

  • Sethi, S. P. (2005). Investing in socially responsible companies is a must for public pension funds—because there is no better alternative. Journal of Business Ethics, 56(2), 99–129.

    Google Scholar 

  • Sharma, B. (2013). Contextualising CSR in Asia: Corporate social responsibility in Asian economies. Lien Centre for Social Innovation: Singapore Management University.

    Google Scholar 

  • Siddiqui, J. (2010). Development of corporate governance regulations: The case of an emerging economy. Journal of Business Ethics, 91(2), 253–274.

    Google Scholar 

  • Smith, M. P. (1996). Shareholder activism by institutional investors: Evidence from CalPERS. Journal of Finance, 51(1), 227–252.

    Google Scholar 

  • Turban, D. B., & Greening, D. W. (1997). Corporate social performance and organizational attractiveness to prospective employees. Academy of Management Journal, 40(3), 658–672.

    Google Scholar 

  • Uddin, S., & Choudhury, J. (2008). Rationality, traditionalism and the state of corporate governance mechanisms: Illustrations from a less-developed country. Accounting, Auditing & Accountability Journal, 21(7), 1026–1051.

    Google Scholar 

  • Waddock, S. A., & Graves, S. B. (1997). The corporate social performance–financial performance link. Strategic Management Journal, 18(4), 303–319.

    Google Scholar 

  • Walls, J. L., Berrone, P., & Phan, P. H. (2012). Corporate governance and environmental performance: Is there really a link? Strategic Management Journal, 33(8), 885–913.

    Google Scholar 

  • Wang, T., & Bansal, P. (2012). Social responsibility in new ventures: Profiting from a long-term orientation. Strategic Management Journal, 33(10), 1135–1153.

    Google Scholar 

  • Welford, R. (2004). Corporate social responsibility in Europe and Asia. Journal of Corporate Citizenship, 13(Spring), 33–52.

    Google Scholar 

  • West, A. (2006). Theorising South Africa’s corporate governance. Journal of Business Ethics, 68(4), 433–448.

    Google Scholar 

  • Witt, M. A., & Redding, G. (2011). The spirits of corporate social responsibility: Senior executive perceptions of the role of the firm in society in Germany, Hong Kong, Japan, South Korea and the USA. Socio-Economic Review, 10(1), 109–134.

    Google Scholar 

  • Wu, S. I., & Lin, H. F. (2014). The correlation of CSR and consumer behavior: A study of convenience store. International Journal of Marketing Studies, 6(6), 66–80.

    Google Scholar 

  • Yan, X. S., & Zhang, Z. (2009). Institutional investors and equity returns: Are short-term institutions better informed? Review of Financial Studies, 22(2), 893–924.

    Google Scholar 

  • Yu, G., & Gray, T. (2016). Succession Planning at Samsung: The Merger Formula of Cheil Industries and Samsung C&T. Harvard Business School Case, 117–036.

  • Zahra, S. A., Hayton, J. C., & Salvato, C. (2004). Entrepreneurship in family vs. non-family firms: A resource-based analysis of the effect of organizational culture. Entrepreneurship Theory and Practice, 28(4), 363–381.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of Business Administration, Chung-Ang University, Seoul, Republic of Korea

    Chune Young Chung & Sang Jun Cho

  2. Department of Economics, Sungkyunkwan University, Seoul, Republic of Korea

    Doojin Ryu

  3. Business School, Korea University, Seoul, Republic of Korea

    Doowon Ryu

Authors
  1. Chune Young Chung
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Sang Jun Cho
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Doojin Ryu
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Doowon Ryu
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Doojin Ryu.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendix: List of control variables

Appendix: List of control variables

Variable

Definition

SIZE

The natural log of firm i’s sales in year t

LEV

The ratio of firm i’s total debt to the market value of equity (current stock price multiplied by common shares outstanding) in year t

ROA

The ratio of firm i’s earnings before interest and tax (EBIT) to total assets in year t

Q

The ratio of firm i’s total market value (sum of market capitalization and long- and short-term liabilities) to total assets in year t

RNDS

The ratio of firm i’s research and development expenses to sales in year t

BM

The ratio of firm i’s total equity to the market value of equity in year t

CASHF

The ratio of firm i’s operating cash flow to total assets in year t

DIVR

The ratio of firm i’s cash dividend on common stocks outstanding to the market value of equity in year t

TVOL

The ratio of firm i’s total trading volume to common stocks outstanding in year t

BETA

The statistical estimation of the beta coefficient in the regression model given by \(R_{i,t} = \alpha + BETA \cdot R_{M,t} + \varepsilon_{i,t}.\)Ri,t is the daily stock return of firm i in year t, α is the active return relative to the benchmark KOSPI, RM,t is the daily return of the benchmark in year t, and ɛi,t is the unexplained return

MRET

The difference between the return of an asset and that of the benchmark, defined as Ri,t − Rm,t, where Ri,t denotes the stock return for firm i in year t and Rm,t is the market (KOSPI) return for firm i in year t

EP

The ratio of firm i’s EBIT to the market value of equity in year t

SHOUT

The natural log of firm i’s common stocks outstanding in year t

AGE

The number of years since the firm’s establishment, that is, the difference between year t and the firm establishment year

HHI

The industry j specific Hirschman–Herfindahl index is calculated using the equation \(\sum\nolimits_{i = 1}^{N} {S_{ij}^{2} }.\) Firm i’s market share (%) in industry j, or sij, is the ratio of firm i’s sales to the sum of the sales of all N firms in industry j (using sales data for all possible KOSPI- & KOSDAQ-listed firms’). Each subscript j follows the industry classification provided by the KRX

MARKET_D

A binary indicator which is used to identify the firm’s listing on the KOSPI 200. The value of one indicates the firm’s listing and zero otherwise

SD

The standard deviation of daily stock returns for firm i in year t

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Chung, C.Y., Cho, S.J., Ryu, D. et al. Institutional blockholders and corporate social responsibility. Asian Bus Manage 18, 143–186 (2019). https://doi.org/10.1057/s41291-018-00056-w

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/s41291-018-00056-w

Keywords

JEL Classification

Search

Navigation