Institutional ownership of stock and dimensions of corporate social performance: An empirical examination

✍ Scribed by Betty S. Coffey; Gerald E. Fryxell

• Publisher: Springer
• Year: 1991
• Tongue: English
• Weight: 785 KB
• Volume: 10
• Category: Article
• ISSN: 0167-4544
• DOI: 10.1007/bf00382826

✦ Synopsis

Collectively, institutions own an increasing proportion of outstanding corporate equities. As an emergent force in shaping corporate America, the linkages between institutional ownership and corporate social performance (CSP) require empirical examination. Not only do corporate policy makers need to know those areas where social performance may lure or inhibit capital infusions, lawmakers also need a better understanding of the social forces guiding corporate policy. As anticipated, this study found a positive relationship between the amount of institutional ownership of corporate stock and a company's social responsiveness as measured by the representation of women on its board of directors; however, no statistically significant relationship with social responsibility as measured by charitable giving was found. The exemplar of social issues management -compliance with the Sullivan principlesshowed an unexpected, negative relationship with the level of institutional ownership.

Clearly, institutional investors have emerged as a major force in the United States stock market. While institutional holdings accounted for 34.2% of all stocks in 1969, that figure incresed to 43.3% in 1978 (Farrar andGriton, 1981). According to Morrow & Co., Inc. (1988), institutional investors today hold approximately 30% of the outstanding equity of publicly traded companies and 50% of New York Stock Exchange traded stock.