Abstract
Using a large sample of 3541 companies drawn from 30 countries during the period from 2002 to 2010, we analysed the impact of strategic shareholdings on different elements of corporate social responsibility (CSR). We find that total strategic or closely held equity holdings adversely affect the environmental, social and governance scores provided by ASSET4. However, this effect is largely driven by entrenched and undiversified holdings such as family and corporate cross-holdings, whereas diversified institutional investments typically have an insignificant impact. The influence of undiversified holdings includes particularly strong negative impacts on measures that include climate change, environmental management, business ethics and human rights. Thus the impact of ownership on CSR performance differs depending on both the type of owner and the type of CSR.
Notes
We follow the adaptation by Aguilera et al. (Citation2007) of the definition introduced by Davis (Citation1973) and refer to CSR as ‘the firm's considerations of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm to accomplish social and environmental benefits along with the traditional economic gains which the firm seeks’ (Aguilera et al. Citation2007, 836). While there are many definitions of CSR, this formulation emphasizes the potential external nature of benefits from CSR initiatives and the relation of CSR to the wealth-generating goal of the firm. Further, we use ESG and CSR terms as synonyms for the purposes of the discussion in this study.