Do institutional investors drive corporate social responsibility? International evidence
Open accessAbstract
This paper assesses whether shareholders drive the environmental and social (E&S) performance of firms worldwide. Across 41 countries, institutional ownership is positively associated with E&S performance with additional tests suggesting this relation is causal. Institutions are motivated by both financial and social returns. Investors increase firms’ E&S performance following shocks that reveal financial benefits to E&S improvements. In cross section, investors increase firms’ E&S performance when they come from countries with a strong community belief in the importance of E&S issues, but not otherwise. As such, these institutional investors transplant their social norms regarding E&S issues around the world.
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Higher institutional ownership, stronger investors' social norm or strong community belief, EU regional concentration, longer investor horizon, and public commitments are institutional investor characteristics that contribute to the improvement of firm's ESG performance.
“Higher institutional ownership (Chen et al., 2020;Crane et al., 2019;Dyck et al., 2019), stronger investors' social norm or strong community belief (Dyck et al., 2019), EU regional concentration (Crane et al., 2019), longer investor horizon (Glossner, 2019;Kim et al., 2019), and public commitments (Gibson et al., 2022) are all institutional investor characteristics that have been found to contri”
From A review on ESG investing: Investors' expectations, beliefs and perceptions (2024) · cites this paper as Dyck et al., 2019
The Conclusion reports that firms with greater institutional ownership improved E&S performance and that investors from countries with supportive social norms affected firms’ E&S performance. Those are the two characteristics attributed to Dyck et al. in the citing sentence. The source supports environmental and social performance, but not the broader claim about ESG performance, which also includes governance; the other listed characteristics are cited to other works. (LLM, conf=0.86)
Experimental — accuracy not yet measuredIndependent institutions are anticipated to be more involved in monitoring management.
“are therefore anticipated to be more involved in monitoring management”
From The Importance of Climate Risks for Institutional Investors (2020) · cites this paper as Dyck et al. (2019)
Section 4 says institutional investors can engage with management, and Section 4.2 identifies private engagement as a likely way they push for environmental and social changes. Table 7 separately examines independent institutional investors, but the copy does not say they are expected to monitor management more than other investors. (LLM, conf=0.83)
Experimental — accuracy not yet measuredInstitutions increasingly include explicit commitments to ESG issues in their mandates, often initiating ESG-related shareholder engagement and demanding higher standards on corporate ESG disclosure.
“Recently, institutions increasingly include explicit commitments to ESG issues in their mandates, often initiating ESG-related shareholder engagement and demanding higher standards on corporate ESG disclosure (see, e.g., Dyck, Lins, Roth, and Wagner (2019), Krueger, Sautner, and Starks (2020), Barko, Cremers, and Renneboog (2021), Ilhan, Krueger, Sautner, and Starks (2023), and Hoepner, Oikonomou,”
From Sustainability Preferences Under Stress: Evidence from COVID-19 (2020) · cites this paper as Dyck, Lins, Roth, and Wagner (2019)
Section 3.1 reports that UN PRI signatories commit to incorporating ESG issues into investment decisions and that their share of the sampled institutional owners rose from zero to 57%. Section 4.2 identifies private engagement as the most likely channel for investors to press firms for stronger E&S performance. The paper does not establish that institutions generally put explicit ESG commitments in their mandates or demand higher standards of corporate ESG disclosure; its discussion of disclosure in Section 2.1 concerns data used to measure firms' performance. (LLM, conf=0.86)
Experimental — accuracy not yet measuredInstitutional investors do not use exit and selection as mechanisms to push for ESG improvements.
“This is consistent with Dyck et al.'s (2019) finding that institutional investors do not use exit and selection as mechanisms to push for ESG improvements.”
From The origins of <scp>ESG</scp> demand: Evidence from retail and institutional investor responses to environmental rankings (2026) · cites this paper as Dyck et al. (2019)
The Introduction says selecting good E&S firms or selling bad ones is not a driver of E&S performance change, and Section 4.1 finds no support for exit and selection explaining broad changes. But Section 4.1 also says some investors use screening and exit to influence firms. The claim overstates a finding that these mechanisms are not important overall as a finding that investors do not use them. (LLM, conf=0.88)
Experimental — accuracy not yet measuredInstitutional investors increasingly have ESG mandates, engage in ESG issues, and tend to commit to ESG publicly.
“Increasingly Institutional investors have ‘ESG Mandates.’ They engage in ESG issues (Barko, Cremers, & Renneboog, 2022; Dyck, Lins, Roth, & Wagner, 2019; Hoepner, Oikonomou, Sautner, Starks Laura, & Zhou, 2020; Ilhan, Krueger, Sautner, & Starks, 2020; Krüger, Sautner, & Starks, 2020) and tend to commit to ESG publicly (Gibson, Glossner, Krüger, Matos, & Tom, 2020).”
From Sustainable mutual fund performance and flow in the recent years through the COVID-19 pandemic (2022) · cites this paper as Dyck, Lins, Roth, & Wagner, 2019
Empirical evidence shows that ESG investment can generate societal impact through various channels such as environmental activism, shareholder coordination, institutional commitment, divestment, and two-tier engagement.
“Empirical evidence shows that ESG investment can generate societal impact through various channels such as environmental activism (Naaraayanan et al., 2020), shareholder coordination (Crane et al., 2019), institutional commitment (Dyck et al., 2019), divestment (Berk & van Binsbergen, 2021), and two-tier engagement (Dimson et al., 2021).”
From A review on ESG investing: Investors' expectations, beliefs and perceptions (2024) · cites this paper as Dyck et al., 2019
Institutional commitments to sustainable investment strategies can lead to a positive social impact.
“Institutional commitments to sustainable investment strategies can lead to a positive social impact.”
From A review on ESG investing: Investors' expectations, beliefs and perceptions (2024) · cites this paper as Dyck et al. (2019)
Dyck et al. (2019) use the 2004 Yale EPI index to measure a country's environmental norms.
“In addition,Dyck et al. (2019) use the 2004 Yale EPI index to measure a country's environmental norms.”
From Presidential Address: Sustainable Finance and ESG Issues— <i>Value</i> versus <i>Values</i> (2023) · cites this paper as Dyck et al. (2019)
Independent institutions have fewer potential business relationships with portfolio firms.
“have fewer potential business relationships with portfolio firms”
From The Importance of Climate Risks for Institutional Investors (2020) · cites this paper as Dyck et al. (2019)
The Introduction and Section 5.6 discuss independent institutional investors’ financial incentives and exposure to social norms, but do not compare their potential business relationships with portfolio firms to those of other institutions. Searches for business relationships, business ties, and conflicts of interest did not locate a passage addressing that comparison. (LLM, conf=0.72)
Experimental — accuracy not yet measuredIndependent institutions are more likely to collect information.
“independent institutions are more likely to collect information”
From The Importance of Climate Risks for Institutional Investors (2020) · cites this paper as Dyck et al. (2019)
The Introduction and Table 7 discuss independent institutional investors’ effects on firms’ environmental and social performance, not whether those investors collect more information. Searches for “collect information” and related terms found no passage in our copy addressing that comparison; the data-collection description in Section 2.1 concerns the researchers’ data sources. (LLM, conf=0.75)
Experimental — accuracy not yet measured
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“…and make these commitments public, often initiating shareholder ESG engagement and influencing corporate ESG disclosure policies (see, e.g., Dyck et al. (2019), 1 / 7 / 2020 1 / 14 / 2020 1 / 21 / 2020 1 / 28 / 20202 / 4 / 2020 2 / 11 / 2020 2 / 18 / 2020 2 / 25 / 20203 / 3 / 2020 3 / 10 /…”
BackgroundSustainable mutual fund performance and flow in the recent years through the COVID-19 pandemic
Fang, F., & Parida, S. (2022) · International Review of Financial Analysis · doi:10.1016/j.irfa.2022.102387 · Cited by 51 · see citing works
“’ They engage in ESG issues (Barko, Cremers, & Renneboog, 2022; Dyck et al., 2019; Hoepner et al., 2020; Ilhan et al., 2020; Krüger et al., 2020) and tend to commit to ESG publicly (Gibson et al.”
BackgroundYou, L., & Payne, J. (2026) · Review of Financial Economics · doi:10.1002/rfe.70039
- Authors
- Dyck, A., Lins, K. V., Roth, L., & Wagner, H. F.
- Affiliations
- University of Toronto (CA)
- University of Alberta (CA)
- University of Utah (US)
- Bocconi University (IT)
- Corresponding author
- Dyck, Alexander
- Venue
- Journal of Financial Economics
- Publisher
- Elsevier BV
- Published
- 2019-03
- Volume
- 131
- Issue
- 3
- Pages
- 693-714
- ISSN
- 0304-405X (ISSN-L)
- OpenAlex
- W3123658139
- Cited by
- 2,547
- References
- 5
- Citations by year
- 2026: 503 · 2025: 560 · 2024: 419 · 2023: 340 · 2022: 270 · 2021: 196 · 2020: 164 · 2019: 56 · 2018: 21 · 2017: 12 · 2016: 3 · 2015: 1 · 2014: 1 · 2012: 1
- FWCI
- 182.55
- Type
- journal article
- Language
- en
- Open access
- hybrid
- doi.org
- Licence
- Locations
- Journal of Financial Economics (publishedVersion, cc-by-nc-nd)
- RePEc: Research Papers in Economics (submittedVersion)
- Archivio istituzionale della Ricerca - Bocconi (submittedVersion)
- Topics
- Social Sciences › Business, Management and Accounting › Strategy and Management › Corporate Social Responsibility Reporting
- Social Sciences › Business, Management and Accounting › Accounting › Corporate Finance and Governance
- Social Sciences › Economics, Econometrics and Finance › Finance › Sustainable Finance and Green Bonds
- Keywords
- institutional investors, corporate social responsibility, environmental and social performance, institutional ownership, shareholder influence, social norms, cross-national comparison, community beliefs
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