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Shifting Stakeholders Logics: Foreign Institutional Ownership and Corporate Social Responsibility

Author

Listed:
  • 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)

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.

Suggested Citation

  • Xu Cheng & Xiandeng Jiang & Dongmin Kong & Samuel Vigne, 2024. "Shifting Stakeholders Logics: Foreign Institutional Ownership and Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 194(1), pages 165-183, September.
    • Handle: RePEc:kap:jbuset:v:194:y:2024:i:1:d:10.1007_s10551-023-05587-7
    DOI: 10.1007/s10551-023-05587-7
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