Kecskés, Mansi, and Nguyen (2017)

Kecskés, Ambrus, Sattar Mansi, and Phuong-Anh Nguyen.  “Does corporate social responsibility create shareholder value? The importance of long-term investors.”  Journal of Banking and Finance, October 2017.

From the authors’ abstract: “We argue that long-term investors are natural monitors that can ensure that managers choose stakeholder capital investment to maximize shareholder value. We find that long-term investors increase the value to shareholders of stakeholder capital investment, not as a result of higher cash flow but rather of lower cash flow risk. Numerous recent papers show empirically that indexing by investors has a causal effect on financial and real corporate outcomes. We use the same identification strategy to establish causality of our results. We also use changes across states in stakeholder orientation laws for identification. Our findings suggest that firms can create value for shareholders by investing in stakeholders as long as managers are properly monitored by long-term investors.”

Link:  https://www.sciencedirect.com/science/article/abs/pii/S0378426617302273