Investment Horizon and Corporate Social Performance: The Virtuous Circle of Long-Term Institutional Ownership and Responsible Firm Conduct

Oikonomou, Ioannis; Yin, Chao; Zhao, Lei

doi:10.1080/1351847x.2019.1660197

Investment Horizon and Corporate Social Performance: The Virtuous Circle of Long-Term Institutional Ownership and Responsible Firm Conduct

Oikonomou, Ioannis; Yin, Chao; Zhao, Lei

Authors

Ioannis Oikonomou

Chao Yin

Lei Zhao

Abstract

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.

Citation

Oikonomou, I., Yin, C., & 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), 14-40. https://doi.org/10.1080/1351847x.2019.1660197

Journal Article Type	Article
Acceptance Date	Aug 21, 2019
Online Publication Date	Aug 30, 2019
Publication Date	2020
Deposit Date	Jul 27, 2020
Publicly Available Date	Mar 2, 2021
Journal	European Journal of Finance
Print ISSN	1351-847X
Electronic ISSN	1466-4364
Publisher	Taylor and Francis Group
Peer Reviewed	Peer Reviewed
Volume	26
Issue	1
Pages	14-40
DOI	https://doi.org/10.1080/1351847x.2019.1660197
Public URL	https://durham-repository.worktribe.com/output/1295933
Related Public URLs	http://centaur.reading.ac.uk/85909/

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Copyright Statement
This is an Accepted Manuscript of an article published by Taylor & Francis in The European Journal of Finance on 30 August 2019 available online: http://www.tandfonline.com/10.1080/1351847X.2019.1660197