Do foreign institutional investors drive corporate social responsibility? Evidence from listed firms in China

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Do foreign institutional investors drive corporate social responsibility? Evidence from listed firms in China. / Li, Zhe; Wang, Ping; Wu, Tianlong.

In: Journal of Business Finance & Accounting, 21.07.2020.

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@article{a3dae2e41e7347488448eda31f1f22a2,
title = "Do foreign institutional investors drive corporate social responsibility? Evidence from listed firms in China",
abstract = "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.",
keywords = "capital market benefits, corporate social responsibility, information asymmetry, qualified foreign institutional investors, social awareness",
author = "Zhe Li and Ping Wang and Tianlong Wu",
year = "2020",
month = jul,
day = "21",
doi = "10.1111/jbfa.12481",
language = "English",
journal = "Journal of Business Finance & Accounting",
issn = "0306-686X",
publisher = "Wiley",

}

RIS

TY - JOUR

T1 - Do foreign institutional investors drive corporate social responsibility? Evidence from listed firms in China

AU - Li, Zhe

AU - Wang, Ping

AU - Wu, Tianlong

PY - 2020/7/21

Y1 - 2020/7/21

N2 - 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.

AB - 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.

KW - capital market benefits

KW - corporate social responsibility

KW - information asymmetry

KW - qualified foreign institutional investors

KW - social awareness

U2 - 10.1111/jbfa.12481

DO - 10.1111/jbfa.12481

M3 - Article

JO - Journal of Business Finance & Accounting

JF - Journal of Business Finance & Accounting

SN - 0306-686X

ER -