We examine relationship between common institutional ownership and corporate social responsibility (CSR). We find that common institutional ownership is negatively associated with the level of CSR, which supports an anti-competitive view. We conduct a propensity score matching (PSM) analysis and a difference-in-differences (DiD) analysis based on a quasi-natural experiment of financial institution mergers. The results alleviate concerns about endogeneity. Using the DiD setting, we find further support for the anti-competitive view, and can rule out alternative explanations. Additional analyses on investor characteristics show that our results come mainly from common owners with long-term investment horizons or lower social inclination. Moreover, we find that the anti-competitive effect is more pronounced for mature firms, and for firms in industries with lower labor intensity and lower customer sensitivity.

Using machine learning and many predictors, we find strong bond return predictability, with an out-of-sample R-squared of 4.48% and an annualized Sharpe ratio of 3.27. ML models identify important predictors for aggregate predictors (bond market returns, TERM and HML factors, GDP growth) and bond characteristics (downside risk, short-term reversal, return skewness, and credit spreads). Predictability varies over time, being stronger during periods of high investor risk aversion, slow economic growth, and strong cross-sectional factor explanatory power. Our results highlight the benefits of leveraging both cross-sectional and time-series predictors to forecast corporate bond returns while considering public and private bonds.

This paper examines whether corporate social responsibility (CSR) aligns with shareholder interests or stems from agency conflicts. To explore this, we utilize the staggered adoption of state-level Corporate Opportunity Waiver (COW) laws, which potentially weaken the fiduciary duty of loyalty among directors and officers, thereby exacerbating agency conflicts. Through a difference-in-differences analysis, we find that CSR activities significantly decrease following the enactment of COW laws. This decline is more pronounced in firms with weaker corporate governance, greater external opportunities for directors and officers, less incentivized CEOs, and those operating in less competitive industries. Additionally, our results show that the positive effect of CSR on financial performance is diminished by the adoption of COW laws. These findings support the value-enhancing perspective of CSR and highlight the importance of fiduciary duty of loyalty in promoting CSR.

We investigate the impact of family control on corporate social responsibility (CSR) performance. Using newly collected data on the ultimate ownership structure of publicly traded firms in nine East Asian economies, we find that family-controlled firms exhibit lower CSR performance, consistent with the expropriation hypothesis of family control. The negative relationship between family control and CSR is robust to alternative measures of family control, different components of CSR, as well as to endogeneity tests, subsample tests, and alternative estimation methods. We further find that CSR underperformance concentrates in family firms with greater agency problems and in countries with weaker institutions. Moreover, the underperformance of East Asian family firms holds when controlling for the effects of other large shareholders and when comparing with family firms from other countries. These findings contribute to understanding the determinants of CSR and highlight the importance of corporate governance and the institutional environment in improving CSR performance of family-controlled firms.