Institutional Owners and Corporate Social Performance

A study investigated the relationship between institutional ownership and corporate social performance in firms. It is hypothesized that institutions invest more heavily in companies with strong corporate social performance. The study is based on a group of companies from the S&P 500. Analysis indicated a significant, positive relationship between social performance and the number of institutions holding the shares of a company and a positive but insignificant relationship between social performance and the percentage of shares held by institutions. It is concluded that improving a company's corporate social performance invokes no penalty in institutional ownership.