Institutional Cross-blockholding and Stakeholder Interests: Evidence from Corporate Social Responsibility

Posted: 9 Mar 2021

See all articles by Tao Chen

Tao Chen

Nanyang Technological University (NTU) - Division of Banking & Finance

Jimmy Chengyuan Qu

Nanyang Business School, Nanyang Technological University

Date Written: September 6, 2020

Abstract

Using a comprehensive sample of U.S. listed firms, this paper finds a negative impact of institutional cross-blockholding on firms’ corporate social responsibility (CSR) performance. The causality is established by the quasi-natural experiment from mergers between institutional blockholders. By analyzing the change of investor attention measured by EDGAR searching volume during cross-blockholding periods, we find evidence to support that the baseline results come from distraction when blockholders hold multiple firms in the same industry. Evidence from shareholder proposals on socially responsible investment also shows consistent results. In sum, our paper suggests the distraction channel through which institutional cross-blockholding affects corporate decisions and reveals a “dark side” of institutional cross-blockholding in terms of stakeholders’ interests.

Keywords: Institutional Cross-blockholding; Corporate Social Responsibility; Investor Distraction

JEL Classification: G23, G34, M14

Suggested Citation

Chen, Tao and Qu, Jimmy Chengyuan, Institutional Cross-blockholding and Stakeholder Interests: Evidence from Corporate Social Responsibility (September 6, 2020). Available at SSRN: https://ssrn.com/abstract=3714094

Tao Chen

Nanyang Technological University (NTU) - Division of Banking & Finance ( email )

S3-B1A-08, Nanyang Avenue
Singapore, 639798
Singapore

Jimmy Chengyuan Qu (Contact Author)

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore

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