Investment horizon and corporate social performance: the virtuous circle of long-term institutional ownership and responsible firm conduct

Oikonomou, I., Yin, C. and Zhao, L. (2020) Investment horizon and corporate social performance: the virtuous circle of long-term institutional ownership and responsible firm conduct. European Journal of Finance, 26 (1). pp. 14-40. ISSN 1466-4364 doi: 10.1080/1351847X.2019.1660197

Abstract/Summary

We investigate the relationship between corporate social performance and institutional ownership. We distinguish between long-term and short-term institutional investors using holdings-based measures which directly capture the investment horizon of each institution. Our analysis shows that long term institutional investment is positively related to corporate social performance(mainly by an avoidance of investing in firms with significant controversies) whereas short-term institutional investment is negatively related to corporate social performance. Further investigation reveals that increased holdings of a firm by long-term investors are positively associated with its future corporate social performance. Hence, we provide evidence of a ‘virtuous circle’ between long term investment and social responsibility.

Item Type	Article
URI	https://reading-clone.eprints-hosting.org/id/eprint/85909
Identification Number/DOI	10.1080/1351847X.2019.1660197
Refereed	Yes
Divisions	Henley Business School > Finance and Accounting
Publisher	Taylor & Francis
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