Does institutional ownership and internationalization affect corporate social responsibility in emerging economy firms? An empirical evidence from India

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Manogna R.L. ◽  
Aswini Kumar Mishra
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Institutional Investors ◽  
Emerging Economy ◽  
Group Affiliation ◽  
International Investments ◽  
Content Type ◽  
Business Group Affiliation ◽  
Lending Institutions ◽  
Corporate Social

Purpose The preference of firm corporate social responsibility (CSR) spending is shaped by different groups of owners and the institutional environment in which the firm operates. This paper aims to study the heterogeneity among the controlling groups and firms’ internationalization in influencing the CSR decision in emerging economy firms. Design Methodology Approach This paper draws understanding from institutional theory to inspect the propensities of various ownership groups such as lending institutions (LI), domestic mutual funds (MF) and foreign institutional investors (FIIs). The empirical analysis was conducted from a sample of 1,594 unique Bombay stock exchange (BSE)-listed non-financial Indian firms during the 2014–2019 period using Tobit panel regression analysis. Findings The findings reveal that firms’ CSR activities are impacted differently by ownership share of different types of institutional investors after controlling for firm-level resources and capabilities. Lending institutions, FIIs and MF are supportive of CSR investments by firms along with international investments by the firm. Further, the results show that the CSR spend is positively influenced by the business group affiliation of the firm compared to the unaffiliated group of firms. Practical Implications The analysis has implications for both institutional investors and multinational firms. In the merging market context, managers and owners who target long term strategies such as CSR will benefit from increasing shareholdings of creditors (lending institutions). They can also take steps to improve their transparency and corporate governance structure so as to attract foreign institutional investments, thus, in turn, helping the internationalization process of the firm. Originality Value This paper considers the role of the diverseness of the ownership institutional investors along with the moderating effect of business group affiliation of the firm and international investments in impacting the CSR spend. This disparity has not been previously studied with the latest data in an emerging economy context.

Corporate social responsibility, business group affiliation and shareholder wealth: evidence from an emerging market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Eswaran Velayutham ◽  
Vijayakumaran Ratnam
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Emerging Market ◽  
Business Group ◽  
Shareholder Wealth ◽  
Group Affiliation ◽  
Content Type ◽  
Business Group Affiliation ◽  
Corporate Social ◽  
The Relationship

Purpose This paper aims to examine the relationship between corporate social responsibility (CSR) and shareholder wealth arising from announcement returns of security issuance from a frontier market. It also explores the role of business group affiliation (BGA) on this relationship. Design/methodology/approach The study uses short-term scenarios to examine the link between CSR and shareholder wealth using the event study methodology which helps us mitigate the reverse causality problems related to studies of the relationship between CSR and firm value. Abnormal returns surrounding the security issue announcements were generated using the market model. Findings This paper finds that security issuers with high CSR scores are associated with higher shareholder value. However, this paper finds that CSR activities of security issuers with BGA are value-destroying which is consistent with the agency perspective of CSR. Research limitations/implications This study is limited to only one nascent market, namely the Colombo Stock Exchange. Originality/value This study documents that CSR and BGA are important determinants, among others, of stock price reactions to security offerings in emerging markets.

Ownership structure and corporate social responsibility in India: empirical investigation of an emerging market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Manogna R.L.
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Mutual Fund ◽  
Institutional Investors ◽  
Multinational Firms ◽  
Emerging Market ◽  
Governance Structure ◽  
Content Type ◽  
Lending Institutions ◽  
Corporate Social

Purpose Previous studies have examined the relationship between institutional investors and corporate social responsibility (CSR) engagement primarily for the case of developed nations. The purpose of this paper is to look at the association between different ownership categories and CSR spending of selected Indian firms within an emerging market context. Design/methodology/approach This study examines the motivations that guide the CSR strategies of different ownership groups. Random-effects Tobit panel regression is performed on a panel of BSE-listed non-financial Indian firms panel comprising of 5,313 firm year observations over a six-year period (2014-2019). Findings Heterogeneous behavior of institutional investors is revealed through the study. Different categories of institutional investors have different preferences for CSR spending of a firm. Lending institutes and foreign institutional investors (FIIs) are seen to support the CSR investments. However, mutual fund investors are seen to not influence the CSR spend by the firms. Further, the results show that family ownership, measured in terms of family shareholding, positively moderates the lending institutions and mutual funds toward CSR and does not impact the FIIs decision regarding the CSR investments. Practical implications The analysis has implications for both institutional investors and multinational firms. In the emerging market context, managers and owners who target long term strategies such as CSR, will benefit from increasing shareholdings of creditors (lending institutions). They can also take steps to improve their transparency and corporate governance structure so as to attract the foreign institutional investments. Originality/value Managers cannot ignore the heterogeneities of institutional investors in their investment decisions and hence CSR decisions need to align with those of different types of investors. This study adds to the existing literature by offering new empirical insights from the perspective of an emerging market, India.

Slack resources, free cash flow and corporate social responsibility expenditure: evidence from an emerging economy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shah Md Taha Islam ◽  
Ratan Ghosh ◽  
Asia Khatun
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Cash Flow ◽  
Random Effect ◽  
Emerging Economy ◽  
Free Cash Flow ◽  
Slack Resources ◽  
Content Type ◽  
Review Reports ◽  
Corporate Social

PurposeThe purpose of this study is to investigate whether financial resource allocation decisions for corporate social responsibility (CSR) depends on slack resources and free cash flow.Design/methodology/approachThe study's sample consists of 202 company-year observations from 51 financial institutions over the period 2015–2019. The authors collected CSR data from CSR review reports published by the Central Bank (Bangladesh Bank). The financial and governance data are collected from corporate annual reports and year-end review reports published by the Dhaka Stock Exchange. This study uses both the random-effect and generalized estimating equation models to test the hypotheses.FindingsThe authors establish two key findings consistent with the predictions of slack resource theory and free cash flow theory. First, the authors find a significant and positive relationship between slack resources and CSR expenditure. This result also supports the traditional thinking about corporate giving – that doing well enables doing good. Second, the author show that increases in free cash flow are associated with increases in CSR expenditure. This indicates the presence of agency problems between managers and shareholders regarding CSR expenditure.Originality/valueThis study is the first to show the positive impacts of slack resources and free cash flow on CSR expenditure in an emerging economy characterized by both capital constraints and high salience of CSR expenditure. The study has important implications for regulators, advocacy groups, shareholders and analysts in emerging economies that share similar contextual characteristics.

Does institutional ownership affect firms' international investments? empirical evidence from India

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Manogna R L ◽  
Aswini Kumar Mishra ◽  
Abhishek Kumar Sinha
Keyword(s):  
Mutual Funds ◽  
Mutual Fund ◽  
Institutional Investors ◽  
Risk Perceptions ◽  
Emerging Economy ◽  
Strategic Decision ◽  
Foreign Investments ◽  
International Investments ◽  
Content Type ◽  
Lending Institutions

PurposeThe preference of firm internationalization is shaped by different groups of owners and the institutional environment in which the firm operates. Past studies have largely ignored the heterogeneity among the controlling groups in influencing the internationalization decision in emerging economy firms.Design/methodology/approachIn this study, the authors draw understanding from behavioral risk perspective and institutional theory to inspect the risk perceptions and propensities of various ownership groups such as lending institutions, domestic mutual funds and foreign institutional investors (FIIs). Empirical analysis was conducted from a sample of 2695 unique BSE-listed nonfinancial Indian firms during 2005−2019 period using Tobit panel regression analysis.FindingsThe findings reveal that firms' international investments are impacted differently by ownership share of different types of institutional investors after controlling for firm-level resources and capabilities. While lending institutions and FIIs are supportive of foreign investments by firms, domestic mutual funds are not supportive of this strategic decision on foreign investment.Research limitations/implicationsFurther, our results show that family ownership, measured in terms of family shareholding, negatively moderates the lending institutions toward internationalization and does not impact the FIIs and mutual fund investor's decision regarding the foreign investments.Originality/valueTo the best of the author's knowledge, the current paper is the first to address the risk perceptions of various ownership groups on firm's international outlook in an emerging economy context with the latest data. This practical perspective helps the organizations in managing the ownership holdings.

Corporate social responsibility and institutional investors: the intervening effect of financial performance

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shafat Maqbool ◽  
Nasir Zamir
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Performance ◽  
Institutional Investors ◽  
Decision Process ◽  
Content Type ◽  
Corporate Social ◽  
The Impact ◽  
The Relationship

PurposeThe research on the role of corporate social responsibility in investors' decision process has proliferated over the past few decades. This paper aims to explore the mediating role of financial performance in the relationship between corporate social responsibility and institutional investors.Design/methodology/approachPanel regression was performed on a sample of 29 commercial banks nine years from 2009 to 2017.FindingsThe initial findings of the study show that that corporate social responsibility has a positive and significant impact on institutional investors. However, when the interaction term (financial performance) was incorporated, the relationship between CSR and institutional turns out to be neutral. The study concludes that financial performance plays a pivotal role in the selection of investment avenues.Originality/valueIn Indian context, there is a dearth of research work which studies the impact of sustainable practices on investors' decision process. This topic has received wider attention but lacks insights from developing countries, like India. This article presents a new approach to verify the relationship through the mediating variable (financial performance).

scholarly journals Business Group-Affiliation and Corporate Social Responsibility: Evidence from Listed Companies in China

2021 ◽  
Vol 13 (4) ◽  
pp. 2110
Author(s):  
Xin Huang ◽  
Xianling Jiang ◽  
Wei Liu ◽  
Qian Chen
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Emerging Market ◽  
Business Groups ◽  
Listed Companies ◽  
Business Group ◽  
Vital Role ◽  
Group Affiliation ◽  
Business Group Affiliation ◽  
Corporate Social

Business groups have played a vital role in the development of emerging markets. However, we share very limited understanding in the role of business group that act on affiliated firms’ CSR performance. Using manually sorted data on A-share listed companies and business groups in China from 2010–2017, we examine whether a company’s business group-affiliation affects its corporate social responsibility (CSR) performance and the mediating mechanisms of this association. Our empirical models show that group companies bear a higher level of social responsibility compared to independent companies. This positive relationship between group-affiliation and social responsibility relies on resource allocation through internal capital markets, rent-seeking initiatives, and consideration of corporate reputation. Moreover, group affiliation benefits the firm’s CSR performance in employee’s responsibilities, consumers’ responsibilities and environmental responsibilities, while significantly lower the shareholders’ responsibilities. Our empirical valuation of group companies’ CSR levels can serve as a benchmark for emerging market companies implementing social responsibility policies.

Do institutional investors have homogeneous influence on corporate social responsibility? Evidence from investor investment horizon

2019 ◽  
Vol 46 (3) ◽  
pp. 301-322 ◽  
Author(s):  
Yun Meng ◽  
Xiaoqiong Wang
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Institutional Investors ◽  
Empirical Support ◽  
Investment Horizon ◽  
Short Term ◽  
Content Type ◽  
Corporate Social ◽  
Institutional Shareholders

Purpose The purpose of this paper is to investigate the relation between the investment horizon of institutional investors and corporate social responsibility (CSR). Design/methodology/approach Utilizing unique datasets on CSR and the investor horizon measures (Gaspar et al., 2005), the authors categorize institutional investors into long-term and short-term investors. This method captures the heterogeneity of investors. Findings The authors show that long-term institutional investors promote CSR engagement, while short-term investors discourage it. The authors further document that shareholders’ ownership horizon has implications on corporate decisions in the CSR framework. The presence of long (short)-term institutional investors is positively (negatively) associated with dividend payout, discourages (encourages) managerial misbehaviors and enhances (reduces) firm valuation, only for firms with high CSR performance. Research limitations/implications Different from previous studies that treat institutional investors homogeneously, this paper provides empirical support that investors are indeed different in influencing CSR. Originality/value Few prior studies address the question of whether active engagement by institutional shareholders on CSR issues differs by the types of institutional ownership. The study attempts to fill this gap by examining the effects of institutions’ investment horizon, one of the major ways to classify institutional shareholders, on the CSR performance of firms.

Ownership and corporate social responsibility in Indian firms

2017 ◽  
Vol 13 (4) ◽  
pp. 714-727 ◽  
Author(s):  
Vidya Sukumara Panicker
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Institutional Investors ◽  
Family Firms ◽  
Individual Investors ◽  
Content Type ◽  
Heterogeneous Behavior ◽  
Domestic Banks ◽  
Corporate Social

Purpose The purpose of this paper is to look at the association between different ownership categories and corporate social responsibility (CSR) spending of selected Indian firms. Design/methodology/approach Random-effects Tobit panel regression is performed on a panel of 4,388 firm years of 1,722 unique firms over a three-year period (2014-2016). Findings Different categories of institutional investors have different preferences for CSR spending of a firm. Promoters of business-group affiliated and unaffiliated firms also behave differently towards CSR activities of their firms. Research limitations/implications Heterogeneous behavior of institutional investors is revealed through the study. Foreign institutions and domestic banks are supportive of CSR investments of a firm. Promoters of family firms and group affiliates also diligently plan CSR activities. Practical implications Managers cannot ignore the heterogeneities of institutional investors in their investment decisions. Individual investors can align their philanthropic preferences with those of different types of institutional investors or firms. Social implications Family-owned firms play a significant role in CSR activities of emerging economies, while individual promoters are not as attracted by the reputational prospects of CSR. Originality/value This paper considers the role of heterogeneities of institutional investors in influencing CSR spending of emerging-economy firms. This heterogeneity has not been previously studied in this context.

Corporate governance and corporate social responsibility (CSR) disclosure in an emerging economy: evidence from commercial banks of Kazakhstan

2019 ◽  
Vol 19 (3) ◽  
pp. 490-507 ◽  
Author(s):  
Nurlan Orazalin
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Commercial Banks ◽  
Banking Sector ◽  
Emerging Economy ◽  
Content Type ◽  
Reporting Practices ◽  
Corporate Social ◽  
The Given

Purpose This paper aims to explore the extent and nature of corporate social responsibility (CSR) reporting practices in the banking sector of Kazakhstan and investigates the effects of board characteristics on CSR disclosures in the given emerging economy. Design/methodology/approach Data on CSR disclosures were manually collected from annual reports of all commercial banks listed in the Kazakhstan Stock Exchange (KASE) for the period 2010-2016. Financial data were obtained from audited financial statements available on bank websites and the Web page of the National Bank of Kazakhstan. Findings The empirical results reveal that board gender diversity has a positive influence on CSR reposting, while board size and board independence have no impact on the level of CSR disclosures. Furthermore, the results show that bank size and bank age are significant factors in the dissemination of CSR disclosures. Additionally, the findings suggest that banks with a share of foreign ownership disclose more extensive and transparent information on CSR activities than banks owned by local investors and state-owned banks. Originality/value The study provides evidence on the relationship between corporate governance and the level of CSR in the context of an emerging economy such as Kazakhstan, representing the Central Asian region. The study contributes to the current literature by focusing on the banking sector of Kazakhstan as a research context due to its substantial representation in the capital market of the given emerging economy.

Do green legitimacy and regulatory stakeholder demands stimulate corporate social and environmental responsibilities, environmental and financial performance? Evidence from an emerging economy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Charles Baah ◽  
Yaw Agyabeng-Mensah ◽  
Ebenezer Afum ◽  
Minenhle Siphesihle Mncwango
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Performance ◽  
Environmental Performance ◽  
Emerging Economy ◽  
Environmental Responsibility ◽  
Content Type ◽  
Adoption And Implementation ◽  
Social And Environmental Responsibilities ◽  
Corporate Social

PurposeOrganizations desire to achieve green legitimacy and regulatory stakeholder demands and have been potent in influencing the adoption and implementation of social and environmental responsibilities in current business settings. Perceiving that social and environmental responsibilities that promote social growth and environmental sustainability have shifted from being optional to mandatory for organizations, this study from the perspectives of institutional and stakeholder theories elucidates the efficacy of green legitimacy and regulatory stakeholder demands on the adoption of social and environmental responsibilities at the organizational level and how these variables relate with environmental and financial performance in the context of an emerging economy.Design/methodology/approachThe study adopted a positivist methodological paradigm, survey research design, a quantitative approach and partial least square structural equation modelling (PLS-SEM) in making data analysis and interpretations due to its appropriateness for predictive research models.FindingsThe results highlighted that desire for green legitimacy and regulatory stakeholder demands influenced the adoption of environmental responsibility, social responsibility, environmental and financial performance. While environmental responsibility positively and robustly influenced environmental performance, social responsibility positively and significantly influenced financial performance. The findings particularly exposed that while environmental responsibility had negative and insignificant effect on financial performance, social responsibility negatively and significantly influenced environmental performance. Moreover, environmental performance was also found to be negatively and insignificantly correlated with financial performance. Based on the results, theoretical and practical implications are explained for policymakers, managers, government authorities and business owners.Originality/valueThe study is among the few to investigate how firms desire to achieve green legitimacy and regulatory stakeholder demands motivate the adoption and implementation of environmental and social responsibilities and its implications on environmental and financial performance in the context of an emerging economy. Although environmental responsibility has received significant attention in past studies, it is mostly considered a subset of corporate social responsibility. Thus, this study is among the first to explore the dimensional effects of corporate social responsibility namely environmental responsibility and social responsibility on performance in the context of an emerging economy and as individual constructs.

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