Do Institutional Investors Drive Corporate Social Responsibility? Flashcards
How does institutional ownership impact firms’ E&S performance?
a) Institutional ownership has no statistically significant effect on E&S performance.
b) Greater institutional ownership is associated with higher E&S performance, particularly in firms with low initial E&S scores.
c) Institutional ownership improves E&S performance only when firms are in extractive industries.
d) Institutional ownership decreases E&S performance due to short-term profit motives.
B
Which type of institutional investor has the most consistent positive impact on E&S performance globally?
Pension plans - have long-term accountability, which consistently drives E&S improvements.
How do social norms influence institutional investors’ impact on E&S performance?
a) Institutional investors from countries with weak social norms are more effective in driving E&S improvements.
b) Social norms have no measurable effect on institutional investors’ influence on E&S performance.
c) Investors from countries with strong social norms drive significant E&S improvements in firms globally.
d) Social norms only affect the financial returns of E&S-focused investments, not their impact.
C
What was the significance of the BP Deepwater Horizon oil spill in this study?
It served as a quasi-natural experiment to demonstrate causality between institutional ownership and E&S improvements.
How do pension plans improve E&S performance compared to hedge funds?
a) Pension plans have shorter time horizons and focus on immediate improvements.
b) Pension plans’ long-term focus and accountability drive consistent improvements, while hedge funds prioritize short-term profits.
c) Pension plans rely on negative screening, while hedge funds actively engage in governance.
d) Pension plans improve E&S performance only in countries with strong social norms.
B
What is the primary mechanism through which institutional investors drive E&S improvements?
a) Public shareholder proposals
b) Private engagement with management
c) Screening strategies (negative and positive screening)
d) Divestment from poorly performing firms
B
How does the regional impact of European institutional investors differ from that of US institutional investors?
European investors drive significant global E&S improvements due to stronger social norms, while US investors have limited domestic impact.
What role do financial crises play in institutional investors’ E&S engagement?
Financial crises amplify institutional investors’ incentives to improve E&S performance due to risk reduction benefits.
Why is public shareholder activism less effective than private engagement in improving E&S performance?
Public shareholder proposals are rare and typically serve as a complement to private engagement.
Why do hedge funds have limited influence on E&S performance?
Hedge funds focus on short-term profits and have little incentive to prioritize E&S improvements.
A different institutional investor from Slovenia sees suboptimal E&S performance in firm KLM. What are possible mechanisms in the article that the institutional investor can use to demand change?
Voice (engagement with the firm), Exit (selling shares), and Selection (choosing firms with good E&S performance).
In the paper “Do Institutional Investors Drive Corporate Social Responsibility?”, 2019, what significant result is found regarding the relationship between institutional ownership and firms’ E&S performance?
A) No significant relationship exists between institutional ownership and E&S performance.
B) Greater institutional ownership is associated with lower firm-level E&S scores.
C) Greater institutional ownership is associated with higher firm-level E&S scores.
D) Institutional ownership only affects E&S performance in Asian firms.
E) Institutional ownership has a diminishing effect on E&S performance over time.
C
In the paper “Do Institutional Investors Drive Corporate Social Responsibility?”, 2019, what does the author indicate about the variation in firms’ E&S performance?
A) E&S performance is uniform across all countries, industries, and time.
B) E&S performance varies significantly across countries, industries, and time.
C) E&S performance is only variable across industries.
D) E&S performance varies based on the firm’s size and age.
E) E&S performance is primarily influenced by regional environmental regulations.
B) E&S performance varies significantly across countries, industries, and time.
How does the paper determine that financial motivation plays a role in institutional investors pushing for E&S improvements?
A) By observing a decrease in E&S performance following the global financial crisis.
B) By noting an increase in E&S performance following the global financial crisis.
C) By comparing E&S performance before and after changes in government regulations.
D) By interviewing CEOs about their motivations for E&S performance.
E) By analyzing stock price reactions to changes in E&S performance.
B) By noting an increase in E&S performance following the global financial crisis.
What assumption does the paper make about the impact of institutional investors’ strategies on E&S performance?
A) Strategies have a neutral impact on E&S performance.
B) Only negative screening strategies are effective.
C) Positive screening strategies limit the scope for institutions to improve E&S performance once they become owners.
D) Institutions have no scope to improve E&S performance due to their investment size.
E) Positive screening strategies are the most effective in improving E&S performance.
C) Positive screening strategies limit the scope for institutions to improve E&S performance once they become owners.
