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Social Norms and CSR Performance

Author

Listed:
  • Steven F. Cahan

    (University of Auckland Business School)

  • Chen Chen

    (Monash University)

  • Li Chen

    (University of Auckland Business School)

Abstract

Some institutional investors (e.g., pensions, universities, and religious, charitable, and not-for-profit institutions) are exposed to social norms and public scrutiny. Prior research indicates that these norm-constrained institutions engage in negative screening and invest less in firms operating in ‘sin’ industries. We examine whether social norms also motivate these institutions to engage in positive screening—where they invest more in firms with better corporate social responsibility (CSR) performance—and CSR-related activism—where they promote improvements in the CSR of existing investees. We find that firms with superior CSR performance have greater ownership by norm-constrained institutions, consistent with positive screening, and we use a natural experiment to establish causality. We also find that increases in the shareholdings of norm-constrained institutions are associated with subsequent improvements in CSR, consistent with activism. Further, we rule out an alternative explanation for our results where the positive screening and activism are ‘profit-driven’ rather than driven by social pressure. Thus, our results suggest that the influence of social norms on stock markets is more pervasive than documented in the prior literature.

Suggested Citation

  • Steven F. Cahan & Chen Chen & Li Chen, 2017. "Social Norms and CSR Performance," Journal of Business Ethics, Springer, vol. 145(3), pages 493-508, October.
  • Handle: RePEc:kap:jbuset:v:145:y:2017:i:3:d:10.1007_s10551-015-2899-3
    DOI: 10.1007/s10551-015-2899-3
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    6. Chantziaras, Antonios & Dedoulis, Emmanouil & Grougiou, Vassiliki & Leventis, Stergios, 2020. "The impact of religiosity and corruption on CSR reporting: The case of U.S. banks," Journal of Business Research, Elsevier, vol. 109(C), pages 362-374.
    7. Andreas G. F. Hoepner & Lisa Schopohl, 2020. "State Pension Funds and Corporate Social Responsibility: Do Beneficiaries’ Political Values Influence Funds’ Investment Decisions?," Journal of Business Ethics, Springer, vol. 165(3), pages 489-516, September.
    8. Christina Deselaers & Alina Dahmen & Sonia Lippke, 2022. "Impact of the COVID-19 Pandemic on CSR Activities of Healthcare Providers," IJERPH, MDPI, vol. 20(1), pages 1-27, December.
    9. Fu, Xiaoqing (Maggie) & Lin, Yongjia & Zhang, Yang, 2020. "Responsible investing in the gaming industry," Journal of Corporate Finance, Elsevier, vol. 64(C).
    10. Xile Yin & Siyu Chen & Dahui Li & Feng Zhang, 2021. "Social norms for fairness and board voting behavior: An experimental investigation," Corporate Governance: An International Review, Wiley Blackwell, vol. 29(2), pages 110-133, March.
    11. Leyuan You, 2024. "The Impact of Social Norms of Responsibility on Corporate Social Responsibility Short Title: The Impact of Social Norms of Responsibility on Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 190(2), pages 309-326, March.
    12. Ahsan Habib & Mabel D' Costa & Ahmed Khamis Al‐Hadi, 2023. "Consequences of local social norms: A review of the literature in accounting, finance, and corporate governance," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(1), pages 3-45, March.
    13. Maria Alessandra Antonelli & Valeria De Bonis & Angelo Castaldo & Alessandrao Gandolfo, 2022. "Sin goods taxation: an encompassing model," Public Finance Research Papers 52, Istituto di Economia e Finanza, DSGE, Sapienza University of Rome.
    14. Eunice S. Khoo & Li Chen & Gary S. Monroe, 2023. "Shareholder election of CSR committee members and its effects on CSR performance," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 50(3-4), pages 716-763, March.
    15. Patrick Velte, 2023. "Which institutional investors drive corporate sustainability? A systematic literature review," Business Strategy and the Environment, Wiley Blackwell, vol. 32(1), pages 42-71, January.
    16. Wang, Tracy & Sun, Aonan, 2022. "Institutional ownership stability and corporate social performance," MPRA Paper 112679, University Library of Munich, Germany.
    17. Ryan P. Jacobson & Lisa A. Marchiondo & Kathryn J. L. Jacobson & Jacqueline N. Hood, 2020. "The Synergistic Effect of Descriptive and Injunctive Norm Perceptions on Counterproductive Work Behaviors," Journal of Business Ethics, Springer, vol. 162(1), pages 191-209, February.
    18. Jiang, Haiyan & Hu, Yuanyuan & Su, Kun & Zhu, Yanhui, 2021. "Do government say-on-pay policies distort managers’ engagement in corporate social responsibility? Quasi-experimental evidence from China," Journal of Contemporary Accounting and Economics, Elsevier, vol. 17(2).

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