{"title":"The reaction to CSR controversies by institutional investors","authors":"Mercedes Alda","doi":"10.1177/23409444221110588","DOIUrl":null,"url":null,"abstract":"Despite the importance of Corporate Social Responsibility (CSR) firm controversies, little is known about their effect on institutional investors. We study the most important institutional investors worldwide: pension funds and mutual funds. The separation between fund management and ownership raises the need to examine how fund managers and fund participants react to investee-firms’ CSR controversies. Considering the conventional/Socially Responsible Investment (SRI-fund nature, we find that investee-firms’ controversies diversely affect fund performance, depending on the controversy type. Furthermore, participants and managers of SRI pension and SRI mutual funds display a passive behavior toward controversies. These attitudes are consistent with enduring behavior and continuity investment policies, such as amending/controlling CSR-firm controversies. In contrast, conventional pension-fund and conventional mutual-fund participants seem guided by traditional investment rules to deal with unsatisfactory situations and respond to controversies after managerial decisions regarding these events with negative reactions. Finally, firms developing CSR-engagement strategies may soften market and managerial reactions toward controversies. Nonetheless, symbolic CSR-engagement practices arouse participants’ responses. JEL CLASSIFICATION: G11, G23, M14","PeriodicalId":46891,"journal":{"name":"Brq-Business Research Quarterly","volume":null,"pages":null},"PeriodicalIF":3.8000,"publicationDate":"2022-07-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Brq-Business Research Quarterly","FirstCategoryId":"91","ListUrlMain":"https://doi.org/10.1177/23409444221110588","RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS","Score":null,"Total":0}
引用次数: 1
Abstract
Despite the importance of Corporate Social Responsibility (CSR) firm controversies, little is known about their effect on institutional investors. We study the most important institutional investors worldwide: pension funds and mutual funds. The separation between fund management and ownership raises the need to examine how fund managers and fund participants react to investee-firms’ CSR controversies. Considering the conventional/Socially Responsible Investment (SRI-fund nature, we find that investee-firms’ controversies diversely affect fund performance, depending on the controversy type. Furthermore, participants and managers of SRI pension and SRI mutual funds display a passive behavior toward controversies. These attitudes are consistent with enduring behavior and continuity investment policies, such as amending/controlling CSR-firm controversies. In contrast, conventional pension-fund and conventional mutual-fund participants seem guided by traditional investment rules to deal with unsatisfactory situations and respond to controversies after managerial decisions regarding these events with negative reactions. Finally, firms developing CSR-engagement strategies may soften market and managerial reactions toward controversies. Nonetheless, symbolic CSR-engagement practices arouse participants’ responses. JEL CLASSIFICATION: G11, G23, M14