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Do institutional investors drive or discourage corporate social responsibility? Evidence from the US market
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en
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27
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This paper assesses whether total institutional ownership drives or discourages companies’ environmental and social performance. Evidence from 2097 US-listed companies suggests that institutional investors significantly discourage both environmental and social performance at the firm level or that the relationship is concave. The negative relationship is even stronger in the subsample covering firms over the last five years (2014-2018) than in the older sample covering firms over years 2008-2013. The negative relationship in the linear specification and the concave relationship in the non-linear specification are statistically significant after controlling for lagged environmental and social performance, corporate governance, concentration of institutional ownership and after winsorizing the data. However, the direction of causality between institutional ownership and companies’ environmental and social performance remains controversial.