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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; Senmao Xia

Review of Managerial Science

Swansea University Author: Paul, Jones

  • Accepted Manuscript under embargo until: 12th May 2021

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 2020
Online Access: Check full text

URI: https://cronfa.swan.ac.uk/Record/cronfa54220
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first_indexed 2020-05-14T19:08:28Z
last_indexed 2020-09-23T03:16:29Z
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spelling 2020-09-22T12:12:32.5438436 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 Springer Science and Business Media LLC 1863-6683 1863-6691 Corporate social responsibility; Institutional investors; Limited attention; Principal–agent problem; China 12 5 2020 2020-05-12 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 2020-09-22T12:12:32.5438436 2020-05-14T13:12:54.5639143 School of Management Business Cheng Xiang 1 Fengwen Chen 2 Paul Jones 0000-0003-0417-9143 3 Senmao Xia 4 Under embargo Under embargo 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
publishDate 2020
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 School of Management
hierarchytype
hierarchy_top_id schoolofmanagement
hierarchy_top_title School of Management
hierarchy_parent_id schoolofmanagement
hierarchy_parent_title School of Management
department_str Business{{{_:::_}}}School of Management{{{_:::_}}}Business
url https://link.springer.com/article/10.1007/s11846-020-00387-z
document_store_str 0
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 2020-05-12T04:19:33Z
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score 10.773208