J Bus Ethics (2017) 146:111–124
DOI 10.1007/s10551-015-2914-8
Does Ownership Structure Matter? The Effects of Insider
and Institutional Ownership on Corporate Social Responsibility
Won-Yong Oh1 • Jongseok Cha2 • Young Kyun Chang3
Received: 15 August 2015 / Accepted: 15 October 2015 / Published online: 23 October 2015
 Springer Science+Business Media Dordrecht 2015
Abstract The extant literature has examined the effects
of ownership structures on corporate social responsibility
(CSR), yet it has overlooked the non-linear and interactive
effects among major shareholder groups. In this study, we
examine the non-linear effects of insider and institutional
ownerships on CSR. We also examine whether it is nec-
essary to have both incentive alignment and monitoring
mechanisms (complementary view) or it is sufficient to
have either mechanism (substitutive view) to promote
CSR. Using a sample of the U.S. Fortune 1000 firms, our
results suggest that insider and institutional ownerships
have non-linear effects on CSR. We also find support for
the complementary mechanisms view, in that the highest
CSR rating is observed when both ownership levels are
high. Therefore, firms need to maintain strong governance
structures to realize synergistic effects in promoting CSR.
Our findings provide a more in-depth understanding of the
relationships between ownership structures and corporate
social outcomes.
& Young Kyun Chang
changy@sogang.ac.kr
Won-Yong Oh
woh@ucalgary.ca
Jongseok Cha
jscha@hansung.ac.kr
1
Haskayne School of Business, University of Calgary, 2500
University Drive NW, Calgary, AB T2N 1N4, Canada
2 non-linear inferences beyond simple linearity often better
Department of Business Administration, Hansung University,
116 Samseongyoro-16gil, Seongbuk-gu, Seoul 136-792,
Korea
3
Sogang Business School, Sogang University, 35 Baekbeom-
ro, Mapo-gu, Seoul 04107, Korea
Keywords Corporate social responsibility  Ownership
structure  Non-linearity  Complementary mechanisms
Introduction
Over the past years, management research (Arora and
Dharwadkar 2011; Barnea and Rubin 2010; Johnson and
Greening 1999; Waddock and Graves 1997) has examined
the effects of ownership structures on corporate social
responsibility (CSR). The results based on empirical evi-
dence of the relationships between major shareholders and
CSR, however, have been mixed. For example, while some
found that institutional shareholders had a positive effect
on CSR (e.g., Graves and Waddock 1994; Johnson and
Greening 1999; Sethi 2005), others found that they had a
negative effect (e.g., Arora and Dharwadkar 2011). Simi-
larly, the effects of insider ownership on CSR are positive
in some studies (e.g., Johnson and Greening 1999; Kock
et al. 2012), but negative in others (e.g., Arora and Dhar-
wadkar 2011; Oh et al. 2011). This inconsistent relation-
ship between ‘good’ ownership structure and CSR in the
previous studies calls for reexamination of the corporate
governance research framework.
Therefore, it is necessary to provide a more theory-
grounded and systematic explanation of the lack of con-
sistency in these empirical results. In this study, we inte-
grate the multiple theoretical perspectives by proposing
that major shareholders have non-linear effects on CSR,
and that there are interactive effects among them. First,
capture the complex realities (Edwards and Parry 1993). In
particular, non-linearity is a suitable pattern because it
recognizes relationships that are ‘‘multifaceted’’ (and even
moving in opposite directions). A notable example is a
123
112
U-shaped (or inverted U-shaped) non-linear relationship
since it fully formulates both positive and negative direc-
tions simultaneously. As such, we argue that exploring
non-linearity can help reconcile diverging findings on the
relationships between ownership types and CSR.
Second, several researchers have begun to recognize the
interactive effects among shareholders (Aguilera et al.
2012; Barnea and Rubin 2010; Hoskisson et al. 2002). For
instance, Aguilera et al. (2012, p. 381) noted that organi-
zational outcomes are ‘‘dependent on the bundle of gov-
ernance mechanisms rather than the effectiveness of any
one mechanism.’’ Barnea and Rubin (2010) also docu-
mented that the presence of ‘‘conflict’’ between different
major shareholders is a determinant of CSR. Surprisingly,
despite the existence of different dynamics among share-
holder groups, no study has directly theorized and empir-
ically tested the interaction among shareholder groups in
relation to CSR. It is worthwhile to research this interactive
mechanism because internal and external owners’ coali-
tions interact with each other in order to influence the
firm’s decisions (Chaganti and Damanpour 1991).
The purpose of this study, therefore, is to fill this
research gap by exploring the non-linear and interactive
effects between two major shareholder groups on CSR.
Specifically, in this paper, we used insider ownership as a
proxy for an incentive alignment mechanism and institu-
tional ownership as a proxy for a monitoring mechanism.
Using a dataset from the Fortune 1000 list in the U.S., we
found strong support for non-linear and interaction effects
on CSR among shareholders. Insider ownership was shown
to have a curvilinear effect on CSR (i.e., U-shape), indi-
cating that firms are less likely to engage in CSR as insider
ownership levels increase from low to moderate, but more
likely to engage in CSR as their ownership levels increase
from moderate to high. Institutional ownership, however,
followed a different pattern in that institutional owners tend
to push firms to engage in CSR as their ownership levels
increase, but this is attenuated once the levels of institu-
tional ownership reach a critical mass. More importantly,
we found support for interaction effects between major
shareholder groups. The pattern of interaction can be
interpreted using a complements versus substitutes con-
ceptual framework (Aguilera et al. 2012; Hoskisson et al.
2009; Rediker and Seth 1995; Schepker and Oh 2013;
Zajac and Westphal 1994). This framework helps us
determine whether it is necessary to have both incentive
alignment by insider ownership and monitoring mecha-
nisms by institutional ownership (i.e., governance as
complements) or sufficient to have either mechanism (i.e.,
governance as substitutes) for inducing CSR. We found
support for the governance-as-complements view in that
the highest CSR rating was observed in cases in which both
insider and institutional ownership levels were relatively
123
W.-Y. Oh et al.
high. This implies that both incentive alignment (by insider
ownership) and effective monitoring (by institutional
ownership) mechanisms work synergistically in promoting
CSR. Our findings shed additional light on the corporate
governance literature by illustrating the interactive effects
of major shareholder groups on CSR.
Theoretical Background
Ownership Structures and Corporate Social
Responsibility
Previous research has found that ownership structures have
a significant influence on organizational decisions (Con-
nelly et al. 2010), including R&D spending (Baysinger
et al. 1991), innovation (Kochhar and David 1996), capital
structure (Chaganti and Damanpour 1991), and diversifi-
cation (Eisenmann 2002). Consistent with this line of
research, key shareholder groups, such as insider and
institutional owners, were found to be associated with a
firm’s social engagement (e.g., Arora and Dharwadkar
2011; Barnea and Rubin 2010; Johnson and Greening
1999; Kock et al. 2012; Oh et al. 2011; Waddock and
Graves 1997).
However, research on the effects of ownership structures
on CSR has produced inconclusive findings. For instance,
insider ownership is either positively (Johnson and
Greening 1999; Kock et al. 2012) or negatively (Arora and
Dharwadkar 2011; Oh et al. 2011) associated with CSR.
The relationship between institutional shareholding and
CSR is also either positive (Graves and Waddock 1994;
Johnson and Greening 1999; Sethi 2005) or negative
(Arora and Dharwadkar 2011).
We assume that such inconsistencies may result from
oversimplifying the complex mechanisms through which
ownership affects a firm’s socially responsible decisions.
First, the corporate governance literature suggests that a
high level of insider ownership can be a double-edged
sword. Agency theory argues that insiders’ and share-
holders’ interests converge when insiders become share-
holders (Eisenhardt 1989; Jensen and Meckling 1976)
through ‘‘incentive alignment’’ mechanisms. A high level
of insider ownership leads to strategic decisions that are
consistent with shareholders’ long-term interests. Accord-
ing to good management theory (Beurden and Gössling
2008; Orlitzky et al. 2003; Waddock and Graves 1997),
socially responsible decisions enhance the firm’s long-term
value. For example, Orlitzky et al. (2003), in a meta-
analysis of 52 studies, found that CSR is positively asso-
ciated with firm’s financial performance. Therefore, the
research on incentive alignment mechanism implies that
managers with high levels of ownership are likely to be
Does Ownership Structure Matter? The Effects of Insider and Institutional Ownership on Corporate… 113

supportive of CSR, which contributes to the shareholders’
long-term wealth. In contrast, other scholars contend that
power acquired by substantial ownership may induce
‘‘management entrenchment’’ in that managers with sig-
nificant shareholdings may seek self-interest even at the
expense of shareholders (Morck et al. 1988; Shleifer and
Vishny 1989). McClelland et al. (2012, p. 1388) noted that
executives with high levels of ownership have ‘‘a greater
capacity to be free from the discipline of the firm’s board,
shareholders, and the market for corporate control.’’ In
particular, because investment in CSR does not necessarily
get translated into immediate returns (Burke and Logsdon
1996; Chang et al. 2013), entrenched managers with sig-
nificant shareholdings may try to avoid CSR-related
decisions.
Similarly, there are also complex mechanisms in the
relationships between institutional ownership and CSR.
Agency theory (Eisenhardt 1989; Jensen and Meckling
1976) suggests that monitoring by institutional investors
leads managers to make decisions aligned with the share-
holders’ long-term interests. Therefore, a high level of
institutional ownership is likely to encourage firms to
actively engage in CSR. In contrast, other researchers (e.g.,
Brickley et al. 1988; Dalton et al. 2003) argued that
because a high level of institutional ownership may lead to
conflicts between institutional investors, the effectiveness
of monitoring may be diminished. This idea is confirmed
by Hoskisson et al. (2002)’s argument that different types
of owners have their own distinct and potentially con-
flicting (rather than unified) preferences for strategic
decisions. Thus, an excessive level of institutional owner-
ship may trigger conflicts among institutions, which may
distract them from encouraging firms to engage in CSR.
Table 1 encapsulates the complex mechanisms that
underlie the relationships between ownership structures
and CSR. Failing to fully address these complex mecha-
nisms of ownership effects may be the source of the
inconsistency in previous findings. Accordingly, to better
understand these relationships, all feasible mechanisms
should be taken into account.
Governance Mechanisms as Complements Versus
Substitutes
Regarding the effect of governance structure on organiza-
tional outcomes, there are two competing perspectives:
governance mechanisms as complements and governance
mechanisms as substitutes. The first perspective suggests
that governance mechanisms are complementary (Hoskis-
son et al. 2009; Schepker and Oh 2013), whereby effective
monitoring (by institutional owners) and incentive align-
ment (by insider ownership) together lead to long-term
shareholders’ wealth in an additive fashion. As such, firms
can maximize shareholders’ wealth when ‘both’ effective
monitoring and incentive alignment schemes are exercised
due to synergistic effects between those important share-
holder groups.
An alternative perspective, whereby governance mech-
anisms act as substitutes, argues that shareholder value
maximization does not require so many governance
mechanisms. This perspective assumes that using multiple
governance mechanisms is costly and may not be efficient
(Rediker and Seth 1995). Thus, using one effective gov-
ernance mechanism does not require the use of another. For
instance, Zajac and Westphal (1994) found that a firm’s
incentive alignment is negatively associated with its use of

Table 1 Various mechanisms between ownership structure and CSR

Mechanism of positive effects Mechanism of negative effects

Insider Incentive alignment Management entrenchment

ownership A high level of insider ownership leads to managerial decisions that Organizational power by stockholdings enables managers
are consistent with the shareholders’ long-term interests. to seek entrenchment by pursuing self-serving decisions.
Thus, a high level of insider ownership is positively associated with Thus, a high level of insider ownership is negatively
CSR. associated with CSR.
Exemplary Eisenhardt (1989), Johnson and Greening (1999) Shleifer and Vishny, (1989), Morck et al. (1988), Oh et al.
literature (2011).
Institutional Effective monitoring Conflicts among shareholders
ownership Oversight from high-level institutional holdings leads to managerial Institutional owners have different propensities to engage
decisions that are consistent with the shareholders’ long-term in monitoring and distinctive time horizons & risk
interests. aversions.
Thus, a high level of institutional ownership is positively associated Thus, a high level of institutional ownership is negatively
with CSR. associated with CSR.
Exemplary Eisenhardt (1989), Jensen and Meckling (1976). Brickley et al. (1988), Dalton et al. (2003), Hoskisson
literature et al. (2002).

123
114
monitoring mechanisms. This observation implies that
firms with weak incentive alignment (i.e., low insider
shareholdings) tend to use the stronger monitoring mech-
anisms (i.e., high institutional ownership) instead, or vice
versa.
In this paper, we adopt the complementary versus sub-
stitutive framework for the CSR context. Therefore, we
theorize and test the relationships by posing competing
hypotheses. If the complementary perspective is supported,
the higher levels of both insider ownership and institutional
ownership are likely to generate a high level of CSR.
However, if the substitutive perspective is supported, a
higher level of either shareholder group will be sufficient to
produce a high level of CSR.
Hypotheses Development
Effects of Insider Ownership on CSR
Agency theory (Eisenhardt 1989; Jensen and Meckling
1976) suggests that providing stock to managers and
directors is an effective way to mitigate agency problems
by aligning their interests with those of the owners. If
insiders own significant shareholdings, they should make
decisions that will maximize the long-term shareholder
wealth because of this incentive alignment (Connelly et al.
2010). Previous studies consistently found that stock
ownership by managers and directors is positively associ-
ated with shareholder value (e.g., Kosnik 1987; Gedajlovic
and Shapiro 2002). If socially responsible decisions
increase the firm’s value, as good management theory
(Beurden and Gössling 2008; Orlitzky et al. 2003; Wad-
dock and Graves 1997) suggests, insiders with significant
shareholdings might be willing to promote the organiza-
tion’s proactive social initiatives. Indeed, Johnson and
Greening (1999) found a positive relationship between top
management equity and social performance targeted to
environmental issues and product quality.
However, the role of insider ownership is more complex
(e.g., Himmelberg et al. 1999). While agency theory sug-
gests that greater insider ownership benefits shareholders’
wealth because it induces incentive alignment, a competing
argument focuses on the effect of management entrench-
ment by significant insider ownership (e.g., McClelland
et al. 2012; Shleifer and Vishny 1989). As insider owner-
ship increases, they are likely to have a greater control of
the firm, which may lead to a greater chance that powerful
managers will entrench themselves for self-serving pur-
poses. If this is the case, insider ownership is expected to
be negatively associated with CSR. Oh et al. (2011) found
a similar pattern, arguing that entrenched top managers in
123
W.-Y. Oh et al.
Korean Cheabol firms tend to disengage from CSR as they
acquire more shareholdings.
Due to these countervailing mechanisms, it is reasonable
to assume that the effects of insider ownership on share-
holder value could be non-linear, which encompasses both
positive and negative directions. Empirical evidence sup-
ports a non-linear effect. For instance, Morck et al. (1988)
found a U-shaped curvilinear relationship between man-
agerial shareholding and financial performance, such that
Tobin’s Q ratio was highest at a low level of ownership
(below 5 %) and a high level of ownership (above 25 %),
with moderate ownership leading to lower performance.
Bhabra (2007) also reported the same pattern in the rela-
tionship between insider ownership and multiple measures
of a firm’s performance. Furthermore, Schepker and Oh
(2013) reported the U-shaped pattern of the relationship
between insider ownership and the likelihood of poison pill
repeal, which is assumed to be beneficial decision for
shareholders.
Similar logic may be applied to a firm’s social perfor-
mance. As insider ownership increases from a low to
moderate level, managers and directors are likely to
become entrenched in self-seeking behavior with their
increased ownership power, and in turn, they will become
reluctant to engage in long-term investments such as CSR.
However, as the ownership increases substantially, man-
agers and directors are more incentivized to align them-
selves more closely with shareholders’ long-term wealth,
and therefore, they are expected to promote social
engagement. Following this logic, we predict that there will
be a convex relationship (i.e., U-shaped pattern) between
insider ownership and CSR. Therefore, we hypothesize:
Hypothesis 1 The relationship between insider owner-
ship and CSR is curvilinear, such that CSR is likely to
decrease as insider ownership increases to a certain point,
but then is likely to increase as insider ownership sub-
stantially increases after passing that point (i.e., a U-shaped
pattern).
Effects of Institutional Ownership on CSR
Many scholars suggest that institutional owners lead firms
to make decisions in the shareholders’ best interests
because of effective monitoring roles (Agrawal and Man-
delker 1992; Kochhar and David 1996; Shleifer and Vishny
1997), even though the voices of all institutional holders
might not be always aligned (e.g., Brickley et al. 1988).
They can exercise significant voting power and have
information advantages over other minority shareholders
(Schnatterly et al. 2008). Moreover, since institutional
owners with significant shares cannot easily sell their
equity without lowering stock prices, they are more
Does Ownership Structure Matter? The Effects of Insider and Institutional Ownership on Corporate… 115

attentive than other shareholders to the firm’s strategic to increase at a decreasing rate as institutional ownership
decisions. increases from low to high.
With respect to an organization’s decisions on social
investments, good management theory (Beurden and Gös-
Interaction Effects Between Insider
sling 2008; Orlitzky et al. 2003; Waddock and Graves
and Institutional Ownerships on CSR
1997) implies that the effect of institutional ownership on
CSR should be positive. If the long-term shareholder value
We propose that both insider ownership (incentive align-
can be enhanced through socially responsible practices,
ment vs. management entrenchment) and institutional
institutional shareholders are willing to engage in CSR
ownership (effective monitoring vs. conflicts) have non-
more proactively (e.g., Coffey and Fryxell 1991). Empiri-
linear effects on CSR. However, in order to fully capture
cal evidence also supports this argument. Graves and
the effects of ownership structure on CSR, we should also
Waddock (1994) found that institutions invest more heav-
consider interactive effects between insider owners and
ily in firms with better corporate social performance. Teoh
institutional owners. For this, there are two contrasting
and Shiu (1990) also found that institutional investors look
perspectives on governance mechanisms: complementary
favorably upon firms actively engaging in CSR. In addi-
(e.g., Hoskisson et al. 2009; Schepker and Oh 2013) versus
tion, Sethi (2005) argued that public pension funds tend to
substitutive (e.g., Rediker and Seth 1995; Zajac and
consider a firm’s long-term effects on the environment,
Westphal 1994). We employ the two perspectives with
sustainability, and good corporate citizenship when they
competing hypotheses in an exploratory manner.
make investment decisions.
One group of researchers has argued that governance
However, we argue that while effective monitoring
mechanisms should be implemented complementarily in
mechanisms by institutional shareholding have positive
order to maximize shareholders’ wealth. Based on agency
effects on CSR, these effects are not linear. A marginal
theory, this line of research proposed the idea of ‘‘gover-
increase in institutional ownership will have differential
nance mechanisms as complements’’ (Hoskisson et al.
effects on CSR, depending on the level of institutional
2009; Schepker and Oh 2013). For instance, the combi-
ownership. Specifically, when the level of institutional
nation of incentive alignment (e.g., insider ownership) and
ownership is relatively low, the marginal increase in
effective monitoring (e.g., institutional ownership) can
institutional ownership will significantly increase the
contribute more to shareholders’ long-term interests. This
monitoring role. In contrast, when the level of institutional
logic suggests that firms with both high levels of incentive
ownership is high, the monitoring activities by many dif-
alignment and effective monitoring will make value-cre-
ferent institutions may be redundant. In such situations, an
ating decisions through the synergistic effects of multiple
incremental increase in institutional ownership might not
governance mechanisms. In contrast, other stream of
have a significant additional impact on monitoring. More-
researchers has claimed that governance constituencies
over, a high level of institutional ownership creates a pool
work as substitutes (e.g., Rediker and Seth 1995; Zajac and
of multiple institutional investors, which may induce
Westphal 1994); shareholder value maximization does not
‘‘conflicting’’ preferences among them regarding CSR
require the maximum possible number of governance
(e.g., Hoskisson et al. 2002). This situation may even have
mechanisms. A main logic of this claim is that executing
a detrimental impact on CSR; CSR can be achieved
multiple governance mechanisms is costly and inefficient
through continuous commitment necessitating unified
to achieve strategic goals (Rediker and Seth 1995).
support from large shareholders. Conflicting voices from
Taken together, if a complementary perspective is sup-
different institutional investors may deter such continuous
ported, greater levels of both insider ownership and insti-
commitment to CSR. Empirically, Arora and Dharwadkar
tutional ownership are likely to generate the highest level
(2011) found that a high level of block institutional own-
of CSR due to an additional synergistic effect. However, if
ership leads to lower CSR ratings.
a substitutive perspective is supported, either incentive
Given the argument above, we predict that institutional
alignment or effective monitoring (i.e., by either type of
ownership will have positive effects on CSR at the low to
owner) is sufficient to produce a high level of CSR.
modest level of institutional ownership. However, we fur-
ther hypothesize that there will be a curvilinear relation- Hypothesis 3a There is a complementary effect between
ship, in that a marginal increase in institutional ownership incentive alignment and effective monitoring on CSR. When
after a certain critical point will not improve CSR. Hence, both insider ownership and institutional ownership levels are
we hypothesize: high, firms are likely to have a higher level of CSR.
Hypothesis 2 The relationship between institutional Hypothesis 3b There is a substitutive effect between
ownership and CSR is curvilinear, such that CSR is likely incentive alignment and effective monitoring on CSR.

123
116
When either insider ownership or institutional ownership
levels are high, firms are likely to have a higher level of
CSR.
Methods
Sample and Data
To test our hypotheses, we used a sample that was initially
derived from the U.S. Fortune 1000 list in 2004. Therefore,
all our sample firms are large public firms headquartered in
the U.S. To be included in the sample, firms had to have
corporate social responsibility data in the subsequent year,
as assessed by Kinder, Lydenberg, Domini (KLD)
Research and Analytics. The source for firm financial data
is Standard and Poor’s Compustat database. Board and
ownership information is obtained from the Corporate
Library database. Due to the lack of full data availability,
our final sample size is 654 firms.
Variables
Dependent Variables
We used archival sources for CSR ratings as the dependent
variable, obtained from KLD. The use of KLD ratings of
CSR is a fairly standard practice in the literature (e.g.,
Arora and Dharwadkar 2011). KLD is a CSR rating pro-
vider that assesses a firm’s social responsibility across a
wide range of dimensions associated with the interests of
multiple stakeholders. KLD scores consist of multiple sub-
domains: Environment, Community, Diversity, Employee
Relations, Human Rights, Product Quality and Safety, and
Corporate Governance. Each major domain contains a set
of ‘‘strength’’ and ‘‘concern’’ ratings. We used the sum of
strengths as a measurement for CSR (Mattingly and Ber-
man 2006).
Independent Variables
All ownership data were collected from the Corporate
Library database and firm proxy statements (i.e., SEC
Form DEF 14A) when necessary. Insider Ownership was
calculated by the proportion of shares owned by executives
and directors. We also collected Institutional Ownership,
the proportion of shareholdings by all institutional
investors.
Control Variables
We included a number of control variables in order to
control for firm and board characteristics. Firm
123
W.-Y. Oh et al.
characteristics such as financial performance, leverage,
size, and age are included in the analysis. First, we con-
trolled for firms’ financial performance and leverage. Since
a firm’s social engagement may be influenced by financial
conditions (e.g., Waddock and Graves 1997), CSR may be
driven by better financial performance and lower debt
obligations. Thus, we controlled for return on assets
(ROA), net income divided by total assets, as a measure for
financial performance, and debt-to-asset ratio, long-term
debt divided by total assets, as a measure for leverage. This
information is obtained from Standard and Poor’s Com-
pustat. Previous research (e.g., Chang et al. 2012) found
that a firm’s size is positively associated with its level of
CSR, because larger firms have more visibility and a larger
scale of activities. For this study, Firm Size was measured
as total sales, from Compustat. Because this variable has
positively skewed distribution, it was transformed loga-
rithmically. We also controlled for Firm Age since it is
associated with firms’ level of CSR (Cochran and Wood
1984). Firm Age was measured by the number of years
since a firm’s foundation, and was obtained from the
Corporate Library database.
Prior studies also argued that corporate board attributes
affect a firm’s CSR (e.g., Johnson and Greening 1999).
Thus, we included the proportion of outside directors and
board size. Greater representation of independent directors
is positively associated with better monitoring and
external legitimacy (e.g., Chang et al. 2012), leading to a
higher level of CSR. The proportion of outside directors
was calculated by dividing the number of unaffiliated
directors on a board by the total number of board mem-
bers. Lastly, board size, measured by the number of
directors on the board, was included in the analysis.
Boards with fewer members may have stronger interper-
sonal ties, which leads to less independence (Hatfield
et al. 1999). In addition, Zahra and Pearce (1989) noted
that firms with large boards are more likely to contain
expertise and diverse perspectives, which may encourage
CSR. Board composition information was also obtained
from Corporate Library, as well as firm proxy statements,
when necessary.
Analysis
After running conventional ordinary least squares (OLS)
regressions, an analysis of the residuals indicated the
presence of heteroskedasticity by the Breusch–Pagan/
Cook–Weisberg test (p \ 0.001). In order to correct for
heteroskedasticity, robust standard errors are used in our
regression models (Huber 1967; White 1982). To test the
curvilinear relationship, we use the quadratic equation in
OLS regression (Cohen and Cohen 1983). The expression
for linear and quadratic equations is as follows, where X
Does Ownership Structure Matter? The Effects of Insider and Institutional Ownership on Corporate… 117

represents ownership and Y represents the firm’s CSR Results

ratings:
Y ¼ b0 þ b 1 X1 þ e
Y ¼ b0 þ b1 X1 þ b2 X12 þ e
Comparing the linear Eq. (1) with the quadratic Eq. (2), if
the incremental change in F-statistics due to the addition
X12 is significant, or coefficient b2 is significant, then the
relationship between X and Y can be said to be curvilinear.
And the sign of b2 indicates whether the quadratic curve is
U-shaped (?) or inversely U-shaped (-). In the quadratic
Eq. (2), the maximum or minimum value in Y is when
X1 ¼ b2b2 (i.e., a point of inflection).
1
Also, the interactive effects of different types of share-
holder groups (i.e., insider ownership and institutional
ownership) are tested by conducting a regression analysis
with interaction terms.
Y ¼ b0 þ b 1 X1 þ b 2 X2 þ b 3 X 1 X2 þ e
To test the interactive effects between shareholder groups,
we conduct a regression analysis for interaction terms
along with squared terms, which allows the testing of the
complex relationship between independent variables as
well as their joint effects (Edwards and Parry 1993) in one
equation model. The general expression for the equation
with two independent variables is as follows, where X1
represents insider ownership and X2 represents institutional
ownership:
Y ¼ b0 þ b1 X1 þ b2 X2 þ b3 X12 þ b4 X22 þ b5 X1 X2 þ e
The results from Eqs. (4) are used to test the comple-
mentary (or substitutive) effect by examining if Y is
increasing (or not) when the interaction term X1 X2 is
increasing.
ð1Þ The means, standard deviations, and correlations for sam-
ple firms are presented in Table 2. The average value of
ð2Þ CSR rating is 2.55 with the standard deviation of 3.00.
Table 3 reveals the results of regression analyses
examining non-linear and interaction effects of insider and
institutional ownership on CSR ratings. Model 1 includes
only control variables. In Model 2, insider and institutional
ownerships were added to assess the linear effects on the
CSR ratings. In Model 3, the interaction term between two
ownership types was included. In Model 4 and Model 5,
the quadratic term of insider ownership and institutional
ownership was added, respectively, to assess the possibility
of a curvilinear relationship with the CSR ratings, as pre-
dicted in Hypotheses 1 and 2. As a full model, Model 6
represents the full regression equation, including the linear,
quadratic, and interaction terms for assessing the possi-
ð3Þ bility of the interaction effect between ownership groups
even after considering the non-linear effects of ownerships
on CSR. It should be noted that if the interaction effect is
not significant in Model 3, but significant only in Model 6,
one can argue that the interaction effect between insider
and institutional ownerships on CSR could be better
understood under a curvilinear logic.
Hypothesis 1 predicts that the relationship between
insider ownership and CSR would follow a U-shaped pat-
tern. Comparing the linear regression model (Model 2) with
the quadratic regression model (Model 4), adding squared
ð4Þ term of insider ownership significantly improves the sta-
tistical model (DF = 8.26, p \ 0.01). This indicates that
the quadratic regression model is a better fit than the linear
model. The coefficient of linear term (X1 ) in the quadratic
regression model is negative and significant (b1 = -3.57,
p \ 0.001), indicating that the CSR level is decreasing as

Table 2 Descriptive statistics and correlations

Mean SD 1 2 3 4 5 6 7 8 9

1 Return on assets 0.05 0.06

2 Debt-to-asset ratio 0.21 0.17 -0.35
3 Firm size 3.70 0.49 0.08 -0.10
4 Firm age 52.99 43.39 0.04 -0.10 0.07
5 Proportion of outside directors 0.70 0.16 0.01 -0.07 0.15 0.17
6 Board size 10.38 2.53 -0.09 0.00 0.33 0.17 0.08
7 Insider ownership 0.09 0.13 -0.05 0.13 -0.21 -0.02 -0.41 -0.12
8 Institutional ownership 0.72 0.16 0.14 0.01 -0.02 -0.08 0.10 -0.19 -0.25
9 CSR (sum of KLD strengths) 2.55 3.00 0.09 -0.12 0.56 0.19 0.17 0.32 -0.22 -0.06
10 CSIR (sum of KLD concerns) 2.96 2.42 -0.06 0.07 0.56 0.10 0.17 0.23 -0.16 -0.09 0.45
Correlations with absolute values greater than .08 are significant at p \ .05 and absolute values greater than .10 are significant at p \ .01
Two-tailed coefficient test

123
118 W.-Y. Oh et al.

Table 3 Regression analyses on CSR (DV: sum of strengths in KLD ratings)

Variable Model 1 Model 2 Model 3 Model 4 Model 5 Model 6

Constant -11.51*** -10.68*** -10.69*** -10.51*** -10.57*** -10.60***

(1.13) (1.14) (1.15) (1.14) (1.13) (1.15)
Control variables
Return on assets 2.19 2.33 2.33 2.56 2.74 3.05
(2.10) (2.09) (2.09) (2.14) (2.08) (2.19)
Debt-to-asset ratio -0.81 -0.62 -0.62 -0.81 -0.51 -0.80
(0.53) (0.53) (0.53) (0.54) (0.54) (0.56)
Firm size 3.00*** 2.95*** 2.94*** 2.88*** 2.91*** 2.85***
(0.32) (0.32) (0.32) (0.32) (0.31) (0.31)
Firm age 0.01*** 0.01*** 0.01*** 0.01*** 0.01*** 0.01***
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Proportion of outside directors 1.24* 0.60 0.60 0.34 0.65 0.40
(0.52) (0.55) (0.55) (0.56) (0.55) (0.55)
Board size 0.17*** 0.16*** 0.16*** 0.16*** 0.14*** 0.13***
(0.04) (0.04) (0.04) (0.04) (0.04) (0.04)
Ownership characteristics
Insider ownership (X1 ) -2.16*** -2.21** -3.57*** -2.36*** -6.61***
(0.64) (0.86) (0.95) (0.65) (1.69)
Institutional ownership (X2 ) -0.58 -0.57 -0.47 1.87* 2.60**
(0.40) (0.41) (0.40) (0.83) (0.86)
Insider ownership-squared (X12 ) 5.99** 10.01***
(2.08) (2.93)
Institutional ownership-squared (X22 ) -3.76** -3.98**
(1.29) (1.30)
Insider ownership 9 institutional ownership (X1 X2 ) 0.16 6.06*
(2.32) (3.00)
R-square 0.362 0.368 0.369 0.372 0.375 0.381
F (d.f.) 32.51 26.01 23.08 23.66 23.84 20.17
(6)*** (8)*** (9)*** (9)*** (9)*** (11)***
DF (d.f.) 0.00 8.26 8.45 6.08
(1) (1)** (1)** (3)***
Robust standard errors are in parentheses. DF (d.f.) is based on the changes in F-statistics over Model 2, which has only linear terms
* p \ 0.05, ** p \ 0.01, *** p \ 0.001 level, two-tailed coefficient test

insider ownership increases. However, the coefficient of
quadratic term (X12 ) is positive and significant (b3 = 5.99,
p \ 0.01), showing that the relationship between insider
ownership and CSR has a U-shaped pattern. Taken together,
the CSR rating decreases as insider ownership increases to a
certain point, and then beyond that point, it increases as
insider ownership increases. Thus, Hypothesis 1 is sup-
ported. Figure 1 displays a U-shaped pattern of the rela-
tionship between insider ownership and CSR.
Hypothesis 2 predicts that CSR would increase at a
decreasing rate as institutional ownership increases. The
quadratic regression model (Model 5) is compared with the
linear regression model (Model 2). Adding the squared
term of institutional ownership in Model 5 significantly
improves the model (DF = 8.45, p \ 0.01). The coeffi-
cient of linear term (X2 ) in Model 5 is positive and sig-
nificant (b2 = 1.87, p \ 0.05), which means that the CSR
rating increases as institutional ownership increases. The
coefficient of quadratic term (X22 ) in Model 5 is negative
and significant (b4 = -3.76, p \ 0.01), which confirms a
curvilinear pattern of the relationship between insider
ownership and CSR. As shown in Fig. 2, the CSR rating
increases as the level of institutional ownership increases;
however, the marginal increase by additional institutional
ownership becomes less significant. Thus, Hypothesis 2 is
also supported.

123
Does Ownership Structure Matter? The Effects of Insider and Institutional Ownership on Corporate…
CSR Ratings
Low High
Insider ownership
Fig. 1 Non-linear relationship between insider ownership and CSR
CSR Ratings
Low High
Institutional ownership
Fig. 2 Non-linear relationship between institutional ownership and
CSR
Hypothesis 3 proposes that insider and institutional
ownerships will have either complementary or substitutive
effects on CSR. The full regression model (Model 6) was
compared with the linear regression model (Model 2). The
incremental changes in terms of F-statistics in Model 6 are
statistically significant (DF = 6.08, p \ 0.001), indicating
that a non-linear relationship and interaction effect were
found in the relationship between the two types of own-
ership and CSR ratings. Specifically, the interaction term is
positive and significant (b5 = 6.06, p \ 0.05), which sup-
ports that there is a complementary effect between incen-
tive alignment and effective monitoring on CSR.
To illustrate these complex findings, we plotted the sur-
faces that correspond with the polynomial regression model.
119
CSR Ratings
High
High
Institutional
Ownership Insider
Ownership
Low
Fig. 3 Effects of interaction between insider and institutional own-
erships on CSR
Figure 3 shows three-dimensional surfaces, in which the
vertical axis represents CSR ratings and the two horizontal
axes represent insider ownership and institutional owner-
ship, respectively. As displayed in Fig. 3, the highest level of
CSR is observed when the levels of both insider and insti-
tutional ownership are high. This graphical pattern also
confirms the complementary effects among governance
constituencies. Thus, Hypothesis 3a is supported.
As shown in Fig. 3, the patterns in three-dimensional
surfaces confirmed that both insider and institutional
ownerships have curvilinear effects on CSR ratings. The
relationship between insider ownership and CSR ratings
follows a U-shaped pattern regardless of the level of
institutional ownership. The relationship between institu-
tional ownership and the CSR rating also shows a similar
pattern, reported in Fig. 2.
Supplementary Analysis: Ownership Structures
and CSIR
Recent research has begun to recognize that there is a
significant difference between the corporate social
responsibility (CSR) and corporate social irresponsibility
(CSIR) (Arora and Dharwadkar 2011; Mattingly and Ber-
man 2006; Oh et al. 2014). While CSR represents forms of
proactive stakeholder management, such as corporate phi-
lanthropy and sustainable practices, CSIR involves reactive
compliance with minimum social and ethical standards. For
instance, CSIR is likely to be the consequence of having
violated environmental regulation, equal employment
opportunity, and health/safety guidelines. Since CSR and
CSIR are conceptually and empirically distinct concepts,
we conducted another set of regression analysis using CSIR
(i.e., measured by the sum of ‘‘concerns’’ listed in the KLD
ratings) as dependent variables, as shown in Table 4.
123
120 W.-Y. Oh et al.

Table 4 Regression analyses on CSIR (DV: sum of concerns in KLD ratings)

Variable Model 1 Model 2 Model 3 Model 4 Model 5 Model 6

Constant -8.69*** -8.01*** -7.94*** -7.93*** -7.93*** -7.87***

(0.91) (0.92) (0.93) (0.92) (0.91) (0.93)
Control variables
Return on assets -2.72 -2.50 -2.48 -2.39 -2.23 -2.10
(1.50) (1.50) (1.50) (1.52) (1.50) (1.53)
Debt-to-asset ratio 1.62** 1.78*** 1.77** 1.69*** 1.85*** 1.74***
0(0.51) (0.51) (0.51) (0.52) (0.51) (0.51)
Firm size 2.79*** 2.77*** 2.77*** 2.74*** 2.75*** 2.72***
(0.25) (0.25) (0.25) (0.25) (0.25) (0.25)
Firm age 0.00 0.00 0.00 0.00 0.00 0.00
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Proportion of outside directors 1.17* 0.83 0.80 0.71 0.87 0.74
(0.46) (0.50) (0.50) (0.51) (0.50) (0.51)
Board size 0.01 0.00 0.00 0.00 -0.01 -0.01
(0.04) (0.04) (0.03) (0.04) (0.04) (0.04)
Ownership characteristics
Insider ownership (X1 ) -1.23 -0.86 -1.89* -1.36* -2.50
(0.64) (1.05) (0.87) (0.65) (1.87)
Institutional ownership (X2 ) -0.85* -0.93* -0.80* 0.76 0.95
(0.35) (0.38) (0.35) (0.72) (0.79)
Insider ownership-squared (X12 Þ 2.80 3.66
(2.65) (3.62)
Institutional ownership-squared (X22 ) -2.47* -2.57*
(1.09) (1.09)
Insider ownership 9 Institutional ownership (X1 X2 ) -1.19 0.89
(2.44) (3.30)
R-square 0.353 0.359 0.360 0.361 0.364 0.365
F (d.f.) 34.60 27.17 24.19 24.04 24.51 20.09
(6)*** (8)*** (9)*** (9)*** (9)*** (11)***
DF (d.f.) 0.24 1.12 5.16 2.14
(1) (1) (1)* (3)
Robust standard errors are in parentheses. DF (d.f.) is based on the changes in F-statistics over Model 2, which has only linear terms
* p \ 0.05, ** p \ 0.01, *** p \ 0.001 level, two-tailed coefficient test

Table 4 shows the results of a series of regression
analyses on the CSIR ratings. Model 4 shows that the
coefficient of linear term (X1 ) is negative and significant
(b1 = -1.89, p \ 0.05), but the coefficient of quadratic
term (X12 ) is not significant, indicating that CSIR
decreases overall as insider ownership increases, but not
in a curvilinear fashion. This result suggests that insiders
with significant shareholdings are likely to discourage a
firm from taking irresponsible actions. While the linear
term of institutional ownership in Model 5 is positive
and not significant (b1 = 0.76), the quadratic term is
negative and significant (b4 = -2.47, p \ 0.05), sug-
gesting that the relationship between institutional
ownership and CSIR is an inverted U-shape. This result
indicates that a firm’s irresponsible actions are likely to
increase up to a moderate level of institutional owner-
ship, but decrease as institutional ownership increases
past the inflection point. However, as shown in Model 6,
any complementary or substitutive effects of ownership
structures on CSIR were not found. Taken together, our
supplementary analysis shows that ownership structure
that leads to proactive social engagement (i.e., CSR
ratings), and ownership structure that prevents the vio-
lation of minimum social and ethical standards (i.e.,
CSIR ratings) have theoretically and empirically dis-
tinctive mechanisms.

123
Does Ownership Structure Matter? The Effects of Insider and Institutional Ownership on Corporate…
Discussion
The corporate governance literature has focused on
examining the relationships between ownership structures
and strategic decisions (e.g., Baysinger et al. 1991;
Eisenmann 2002). Given that corporate social initiatives
can be seen as a form of social ‘‘investment’’ (McWilliams
and Siegel 2001), it is not surprising that key owners are
likely to be involved in their firm’s strategic decisions on
CSR. Several attempts have been made to investigate the
effects of ownership structures on CSR, yet empirical
evidence has shown a mix of positive and negative results.
Because of this empirical inconclusiveness, we proposed
that ownership structures and CSR may not have simple
linear relationships; instead, they could be best presented in
non-linear terms that contain both positive and negative
aspects. We also proposed that each type of ownership may
interact in shaping complicated strategic decisions on CSR.
As such, we tested the non-linear interaction between types
of ownership and its relationships with CSR, and found
strong support.
Our findings provide a breakthrough within the growing
literature on CSR and corporate governance. First, while a
number of studies have focused on the consequences (e.g.,
financial outcomes) of CSR (e.g., Chang et al. 2013;
Godfrey et al. 2009; Margolis and Walsh 2003), less is
known about the ‘‘antecedents’’ of CSR. As gaining credits
and legitimacy of research from the field of management
(Walsh et al. 2003), it is important to broaden the scope of
inquiry from what CSR brings to what brings CSR. We
offer a rich description of how ownership structures, one of
the core corporate governance mechanisms, affect CSR.
Second, our study shows that the ownership–CSR link-
age is non-linear. The non-linear model often resolves the
empirical inconclusiveness by offering nuanced predictions
for various causal inferences and allows for more sophis-
ticated assessments. In our study, insider ownership is
negatively associated with CSR to a certain point, but
positively associated beyond that point. We also found that
as the level of institutional ownership increases, CSR
increases at a decreasing rate. In short, the non-linear
model helps reconcile the empirical tension by embracing
the opposing evidence found in the previous studies.
Third, the existing literature (e.g., Barnea and Rubin
2010; Johnson and Greening 1999) on the ownership–CSR
linkage has been based on the assumption that each type of
ownership affects a firm’s strategy or performance inde-
pendently since different owners may have different
objectives and decision-making horizons (Hoskisson et al.
2002). Recent literature on strategic management, how-
ever, points to cases in which internal and external owners’
coalitions interact with each other to influence the firm’s
121
decisions (Chaganti and Damanpour 1991). In relation to
CSR, surprisingly, no meaningful attempt has been made to
address the interactive effects among different types of
shareholders. To our knowledge, this study is the first to
explore the possibility and finds the evidence of compli-
cated interactions between them.
Furthermore, the interaction between different types of
ownership shows complementary mechanisms, given that
the highest level of CSR is observed when the levels of
both insider ownership and institutional ownership are
high. Our findings are also consistent with the ‘bundle’
perspective of governance (Aguilera et al. 2012); simulta-
neous corporate governance mechanisms, rather than the
effectiveness of any single mechanism, are important in
enhancing the firm’s value. The addition of one mechanism
enhances the other and leads to more effective governance
functions. In other words, even if monitoring by institu-
tional shareholders is in place, the incentive alignment by
insider ownership still provides additive value, or vice
versa. In this sense, our findings suggest that strong gov-
ernance mechanisms are necessary in order to induce a
firm’s social commitment.
In fact, the complementary versus substitutive debate on
corporate governance mechanisms has received an
increasing attention from the field of management (Cha-
ganti and Damanpour 1991; Schepker and Oh 2013; Zajac
and Westphal 1994). The complementary perspective
indicates that better organizational outcomes are more
likely to be observed when both incentive alignment and
monitoring mechanisms are implemented well. The sub-
stitutive perspective alternatively suggests that multiple
governance mechanisms may not in fact be necessary. For
instance, when effective monitoring to limit managers’
opportunism is in place, additional effort in granting
incentives to them may not be necessary, and may even be
costly. While recent studies have considered these con-
trasting views in other contexts, such as executive com-
pensation (Hoskisson et al. 2009) and anti-takeover
provisions (Schepker and Oh 2013), no study has examined
such a competing mechanism in the CSR context. In this
sense, our findings shed additional light on the debate about
corporate governance by extending the discourse to the
topic of CSR.
Finally, previous research on CSR has been challenged
in terms of operationalizing the construct of CSR;
responsibility (or positive) and irresponsibility (or nega-
tive) dimensions are mostly combined. While CSR
involves more promotional and proactive stakeholder
management, CSIR involves more preventive and reactive
compliance with minimum standards; hence, these should
not be combined (Arora and Dharwadkar 2011; Godfrey
et al. 2009; Mattingly and Berman 2006). As such, we
123
122
make two discrete composite ratings—CSR and CSIR—
and conduct separate analyses. Given the different findings
of each analysis (see Tables 3 and 4), our study shows that
the ways in which ownership structures affect CSR and
CSIR are not identical. The insider and institutional own-
erships interact to affect CSR in a non-linear fashion,
whereas such a non-linear interaction pattern is not
observed for CSIR. Thus, consistent with previous studies
on this topic, CSR and CSIR should be treated as separate
concepts; furthermore, our study shows that their deter-
minants (e.g., ownership structure) are also different.
Our findings also offer practical implications for cor-
porate leadership. Given the U-shaped relationship
between insider ownership and CSR, executives and
directors may need to be provided sizeable stock ownership
in order to promote the firm’s social performance. It is
noteworthy that in our sample, as levels of ownership
increase to a certain level, insider ownership can be a
poison since it malfunctions by inducing managers’
entrenchment, and discourages them from taking strategic
endeavors for long-term investments like CSR. However,
once ownership levels go beyond a certain level, managers
with substantial shares would be more committed to CSR.
Our findings may hint at the idea of how top managers’
incentive alignment should be designed and practiced to
promote a firm’s social engagement.
Our findings also inform us that organizations can
benefit from encouraging ‘‘cooperative’’ rather than com-
petitive relationships between governance mechanisms in
their pursuit of social agendas. In our analysis, incentive
alignment by insider ownership and monitoring by insti-
tutional ownerships interact in a complementary way to
promote CSR as the level of ownership increases. Thus,
even if different owners have different objectives and
strategic stances (Hoskisson et al. 2002), they can still
work hand in hand. Specifically, given the occurrence of
complementary effects, firms need to maintain strong
governance mechanisms in order to make incentive align-
ment and effective monitoring work better.
Limitations and Future Research
Despite this study’s significant contributions and implica-
tions, it is not without limitations. First, we assumed that
institutional investors have different preferences and levels
of attention toward CSR. However, we do not elaborate on
the distinction between different types of institutional
investors in terms of their actual preferences and levels of
attention to CSR. Previous literature pointed out the dif-
ferences in propensity to engage in monitoring between
pressure-resistant and pressure-sensitive institutional
investors (e.g., David et al. 1998; Kochhar and David
1996). Thus, future research can benefit from a detailed
123
W.-Y. Oh et al.
classification of institutional investors in predicting the
relationship between institutional ownership and CSR.
Second, even though we used the time-lagged method
between independent variables and dependent variables,
this does not rule out causality issues completely. Thus,
future research can utilize longitudinal methods in order to
minimize the causality concerns. Lastly, we used a sample
of large U.S. public firms, which could limit the general-
izability of our findings outside the U.S.
Conclusion
In sum, there has been growing recognition that it is crucial
for corporate leaders to promote their firm’s social per-
formance. Our study shows that ownership structure, a key
governance mechanism, affects the firm’s engagement in
CSR. By examining the dynamics of major shareholder
groups, we found non-linearity as well as interactive
effects. This study supports the governance mechanisms as
complements view: when both insider and institutional
ownership levels are relatively high, firms tend to make the
strongest commitment to CSR. Based on our findings, we
offer a simple yet convincing argument that firms need to
maintain strong governance mechanisms to maximize their
social performance. Overall, this study advances our
understanding of the relationships between ownership
structures and corporate social outcomes.
Acknowledgement This research was funded by the Haskayne
School of Business, University of Calgary and Hansung University.
References
Agrawal, A., & Mandelker, G. N. (1992). Shark repellents and the
role of institutional investors in corporate governance. Manage-
rial and Decision Economics, 13, 15–22.
Aguilera, R., Desender, K., & Kabbach de Castro, L. (2012). A
bundle perspective to comparative corporate governance. In T.
Clarke & D. Branson (Eds.), The SAGE handbook of corporate
governance (pp. 379–405). London: Sage Publications.
Arora, P., & Dharwadkar, R. (2011). Corporate governance and
corporate social responsibility (CSR): The moderating roles of
attainment discrepancy and organization slack. Corporate
Governance: An International Review, 19, 136–152.
Barnea, A., & Rubin, A. (2010). Corporate social responsibility as a
conflict between shareholders. Journal of Business Ethics, 97,
71–86.
Baysinger, B. D., Kosnik, R. D., & Turk, T. A. (1991). Effects of
board and ownership structure on corporate R&D strategy.
Academy of Management Journal, 34, 205–214.
Beurden, P. V., & Gössling, T. (2008). The worth of values: A
literature review on the relation between corporate social and
financial performance. Journal of Business Ethics, 82, 407–424.
Bhabra, G. S. (2007). Insider ownership and firm value in New
Zealand. Journal of Multinational Financial Management, 17,
142–154.
Does Ownership Structure Matter? The Effects of Insider and Institutional Ownership on Corporate…
Brickley, J. A., Lease, R. C., & Smith, C. W, Jr. (1988). Ownership
structure and voting on antitakeover amendments. Journal of
Financial Economics, 20, 267–291.
Burke, L., & Logsdon, J. M. (1996). How corporate social respon-
sibility pays off. Long Range Planning, 29, 495–502.
Chaganti, R., & Damanpour, F. (1991). Institutional ownership,
capital structure, and firm performance. Strategic Management
Journal, 12, 479–491.
Chang, Y. K., Oh, W. Y., Jung, J. C., & Lee, J. Y. (2012). Firm size
and corporate social performance: The mediating role of outside
director representation. Journal of Leadership & Organizational
Studies, 19, 486–500.
Chang, Y. K., Oh, W. Y., & Messersmith, J. G. (2013). Translating
corporate social performance into financial performance: Explor-
ing the moderating role of high-performance work practices.
International Journal of Human Resource Management, 24,
3738–3756.
Cochran, P. L., & Wood, R. A. (1984). Corporate social responsibility
and financial performance. Academy of Management Journal,
27, 42–56.
Coffey, B. S., & Fryxell, G. E. (1991). Institutional ownership of
stock and dimensions of corporate social performance: An
empirical examination. Journal of Business Ethics, 10, 437–444.
Cohen, J., & Cohen, P. (1983). Applied multiple regression/correla-
tion analysis for the behavioral sciences (2nd ed.). Hillsdale, NJ:
Lawrence Erlbaum.
Connelly, B. L., Hoskisson, R. E., Tihanyi, L., & Certo, S. T. (2010).
Ownership as a form of corporate governance. Journal of
Management Studies, 47, 1561–1589.
Dalton, D. R., Daily, C. M., Certo, S. T., & Roengpitya, R. (2003).
Meta-analyses of financial performance and equity: Fusion or
confusion? Academy of Management Journal, 46, 13–26.
David, P., Kochhar, R., & Levitas, E. (1998). The effect of
institutional investors on the level and mix of CEO compensa-
tion. Academy of Management Journal, 41, 200–208.
Edwards, J. R., & Parry, M. E. (1993). On the use of polynomial
regression equations as an alternative to difference scores in
organizational research. Academy of Management Journal, 36,
1577–1613.
Eisenhardt, K. M. (1989). Agency theory: An assessment and review.
Academy of Management Review, 1, 57–74.
Eisenmann, T. R. (2002). The effects of CEO equity ownership and
firm diversification on risk taking. Strategic Management
Journal, 23, 513–534.
Gedajlovic, E., & Shapiro, D. M. (2002). Ownership structure and
firm profitability in Japan. Academy of Management Journal, 45,
565–575.
Godfrey, P. C., Merrill, C. B., & Hansen, J. M. (2009). The
relationship between corporate social responsibility and share-
holder value: An empirical test of the risk management
hypothesis. Strategic Management Journal, 30, 425–445.
Graves, S. B., & Waddock, S. A. (1994). Institutional owners and
corporate social performance. Academy of Management Journal,
37, 1034–1046.
Hatfield, G., Worrell, D. L., Davidson, W. N, I. I. I., & Bland, E. (1999).
Turbulence at the top: Antecedents of key executive dismissal.
Quarterly Journal of Business and Economics, 38, 3–24.
Himmelberg, C. P., Hubbard, R. G., & Palia, D. (1999). Understand-
ing the determinants of managerial ownership and the link
between ownership and performance. Journal of Financial
Economics, 53, 353–384.
Hoskisson, R. E., Castleton, M. W., & Withers, M. C. (2009).
Complementarity in monitoring and bonding: More intense
monitoring leads to higher executive compensation. Academy of
Management Perspectives, 23, 57–74.
123
Hoskisson, R. E., Hitt, M. A., Johnson, R. A., & Grossman, W.
(2002). Conflicting voices: The effects of institutional ownership
heterogeneity and internal governance on corporate innovation
strategies. Academy of Management Journal, 45, 697–716.
Huber, P. J. (1967). The behavior of maximum likelihood estimates
under nonstandard conditions. In Proceedings of the Fifth
Berkeley Symposium on Mathematical Statistics and Probability.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm:
Managerial behavior, agency costs and ownership structure.
Journal of Financial Economics, 3, 305–360.
Johnson, R. A., & Greening, D. W. (1999). The effects of corporate
governance and institutional ownership types on corporate social
performance. Academy of Management Journal, 42, 564–576.
Kochhar, R., & David, P. (1996). Institutional investors and firm
innovation: A test of competing hypotheses. Strategic Manage-
ment Journal, 17, 73–84.
Kock, C. J., Santaló, J., & Diestre, L. (2012). Corporate governance
and the environment: What type of governance creates greener
companies? Journal of Management Studies, 49, 492–514.
Kosnik, R. D. (1987). Greenmail: A study of board performance in
corporate governance. Administrative Science Quarterly, 32,
163–185.
Margolis, J. D., & Walsh, J. P. (2003). Misery loves companies:
Rethinking social initiatives by business. Administrative Science
Quarterly, 48, 268–305.
Mattingly, J. E., & Berman, S. L. (2006). Measurement of corporate
social action. Business and Society, 45, 20–46.
McClelland, P. L., Barker, V. L., & Oh, W. Y. (2012). CEO career
horizon and tenure: Future performance implications under
different contingencies. Journal of Business Research, 65,
1387–1393.
McWilliams, A., & Siegel, D. (2001). Corporate social responsibility:
A theory of the firm perspective. Academy of Management
Review, 26, 117–127.
Morck, R., Shleifer, A., & Vishny, R. W. (1988). Management
ownership and market valuation: An empirical analysis. Journal
of Financial Economics, 20, 293–315.
Oh, W. Y., Chang, Y. K., & Cheng, Z. (2014). When CEO career
horizon problems matter for corporate social responsibility: The
moderating roles of industry-level discretion and blockholder
ownership. Journal of Business Ethics,. doi:10.1007/s10551-
014-2397-z.
Oh, W. Y., Chang, Y. K., & Martynov, A. (2011). The effect of
ownership structure on corporate social responsibility: Empirical
evidence from Korea. Journal of Business Ethics, 104, 283–297.
Orlitzky, M., Schmidt, F., & Ryne, S. (2003). Corporate social and
financial performance: A meta-analysis. Organization Studies,
24, 403–441.
Rediker, K. J., & Seth, A. (1995). Boards of directors and substitution
effects of alternative governance mechanisms. Strategic Man-
agement Journal, 16, 85–99.
Schepker, D. J., & Oh, W. Y. (2013). Complementary or substitutive
effects? Corporate governance mechanisms and poison pill
repeal. Journal of Management, 39, 1729–1759.
Schnatterly, K., Shaw, K. W., & Jennings, W. W. (2008). Information
advantages of large institutional owners. Strategic Management
Journal, 29, 219–227.
Sethi, S. P. (2005). Investing in socially responsible companies is a
must for public pension funds—because there is no better
alternative. Journal of Business Ethics, 56, 99–129.
Shleifer, A., & Vishny, R. W. (1989). Management entrenchment:
The case of manager specific investments. Journal of Financial
Economics, 25, 123–140.
Shleifer, A., & Vishny, R. W. (1997). A survey of corporate
governance. Journal of Finance, 52, 737–783.
123
124
Teoh, H. Y., & Shiu, G. Y. (1990). Attitudes towards corporate social
responsibility and perceived importance of social responsibility
information characteristics in a decision context. Journal of
Business Ethics, 9, 71–77.
Waddock, S. A., & Graves, S. B. (1997). The corporate social
performance-financial performance link. Strategic Management
Journal, 8, 303–319.
Walsh, J. P., Weber, K., & Margolis, J. D. (2003). Social issues and
management: Our lost cause found. Journal of Management, 29,
859–881.
123
W.-Y. Oh et al.
White, H. (1982). Maximum likelihood estimation of misspecified models.
Econometrica: Journal of the Econometric Society, 53, 1–25.
Zahra, S. A., & Pearce, J. A. (1989). Boards of directors and corporate
financial performance: A review and integrative model. Journal
of Management, 15, 291–334.
Zajac, E. J., & Westphal, J. D. (1994). The costs and benefits of
managerial incentives and monitoring in large US corporations:
When is more not better? Strategic Management Journal, 15,
121–142.
Reproduced with permission of copyright owner. Further reproduction
prohibited without permission.