Corporate Social Responsibility and Large Shareholders: An Analysis of European Firms

34 Pages Posted: 21 May 2009 Last revised: 28 Nov 2014

See all articles by Félix J. López-Iturriaga

Félix J. López-Iturriaga

Universidad de Valladolid - Department of Finance and Accounting; National Research University Higher School of Economics - International Laboratory of Intangible-driven Economy

Óscar López-de-Foronda

University of Burgos - Department of Economics

Date Written: May 21, 2009

Abstract

We analyze the influence of firm ownership structure on corporate social responsibility (CSR) as measured by the Dow Jones Sustainability STOXX Index and the Ethibel Excellence Index. Using data from 1,248 firms from five major European Union countries (United Kingdom, Germany, France, Italy, and Spain) for 2000-2004, we find that the power of the largest shareholder is negatively related to CSR. That is, as the proportion of shares owned by the largest shareholder increases, his or her incentives to engage in CSR decreases. Similarly, we find that a higher contest to the power of the main shareholder by other reference shareholders improves the firm's commitment to socially responsibility actions. Additional results suggest that, conditional on the availability of profitable growth opportunities, family shareholders are more prone to CSR than other types of investors, and, conversely, the percentage of ownership in the hands of institutional investors is negatively related to CSR.

Keywords: corporate ownership structure, corporate social responsibility, family shareholders, growth opportunities, institutional investors

JEL Classification: M14, O16, G32

Suggested Citation

Lopez-Iturriaga, Felix Javier and Lopez de Foronda, Oscar, Corporate Social Responsibility and Large Shareholders: An Analysis of European Firms (May 21, 2009). Available at SSRN: https://ssrn.com/abstract=1408192 or http://dx.doi.org/10.2139/ssrn.1408192

Felix Javier Lopez-Iturriaga

Universidad de Valladolid - Department of Finance and Accounting ( email )

Avda. Valle Esgueva 6
47011 Valladolid
Spain
+34 983 184 395 (Phone)
+34 983 183830 (Fax)

National Research University Higher School of Economics - International Laboratory of Intangible-driven Economy ( email )

Lebedeva,27
Perm, Perm 614070
Russia

Oscar Lopez de Foronda (Contact Author)

University of Burgos - Department of Economics ( email )

Plaza Infanta Elena
E09001 Burgos
Spain

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