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Mandatory corporate social responsibility and foreign institutional investor preferences

Marshall, Andrew, Rao, Sandeep ORCID: 0000-0001-7752-4492, Roy, Partha P. and Thapa, Chandra (2022) Mandatory corporate social responsibility and foreign institutional investor preferences. Journal of Corporate Finance, 76 . ISSN 0929-1199

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Abstract

This paper examines whether the heterogeneity of foreign institutional investors (FIIs) matters when investing in socially responsible investee firms. Exploiting a mandated corporate social responsibility (CSR) regulation in India and using manually collected CSR expenditure data, the results of a quasi-natural experiment confirm that firms that comply with the CSR mandate attract more investments from FIIs. However, the heterogeneity of FIIs plays a significant moderating role, as FIIs from civil law origin countries, and those considered to be independent and long-term investors, invest more in mandated CSR firms. Finally, our empirical evidence also indicates that firms that comply with the CSR mandate experience higher long-term market-based valuations in the post-CSR reform period.

Item Type:Article (Published)
Refereed:Yes
Additional Information:Article number: 102261
Uncontrolled Keywords:CSR; ESG; FII; Foreign institutional investors; Legal origin; Independent and long-term investors
Subjects:Business > Finance
DCU Faculties and Centres:DCU Faculties and Schools > DCU Business School
Publisher:Elsevier
Official URL:https://doi.org/10.1016/j.jcorpfin.2022.102261
Copyright Information:© 2022 The Authors. Open Access (CC-BY 4.0)
ID Code:27481
Deposited On:10 Oct 2022 15:16 by Sandeep Keshava Rao . Last Modified 10 Oct 2022 15:16

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