Institutional Cross-blockholding and Stakeholder Interests: Evidence from Corporate Social Responsibility
Posted: 9 Mar 2021
Date Written: September 6, 2020
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
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