Do foreign institutional investors drive corporate social responsibility? Evidence from listed firms in China
Research output: Contribution to journal › Article › peer-review
- Industrial and Commercial Bank of China Leasing
This paper investigates the effect of qualified foreign institutional investors (QFIIs) on corporate social responsibility (CSR) within the context of listed firms in China. We find that QFIIs offer an incisive channel for improving socially responsible practices. In addition, we find that firms with QFIIs are more likely to comply with the Global Reporting Initiative (GRI) guidelines, and that their sustainability reports tend to be longer. We also find that this positive effect is more pronounced in firms with low initial CSR scores than those with high CSR scores at the time when QFIIs enter the sample. Our empirical evidence further confirms that this positive impact is driven by QFIIs from countries with high social awareness, or QFIIs from geographically distant countries, consistent with their motives, and is linked to the ownership of QFIIs, especially when the QFII is among the top ten of the largest shareholders. Finally, our extended analysis reveals that the increase in CSR performance associated with the presence of QFIIs results in greater firm performance and easier access to finance.
|Journal||Journal of Business Finance & Accounting|
|Early online date||21 Jul 2020|
|Publication status||E-pub ahead of print - 21 Jul 2020|
- capital market benefits, corporate social responsibility, information asymmetry, qualified foreign institutional investors, social awareness