Individual Investors’ Dividend Tax Reform and Corporate Social Responsibility

Individual Investors, Average Skewness, and Market Returns

Sustainability ◽

10.3390/su12208357 ◽

2020 ◽

Vol 12 (20) ◽

pp. 8357

Author(s):

Jungmu Kim ◽

Yuen Jung Park

Keyword(s):

Corporate Social Responsibility ◽

Social Responsibility ◽

Individual Investors ◽

Future Market ◽

Small Probability ◽

Market Returns ◽

Short Term ◽

Noise Traders ◽

Seeking Behavior ◽

Corporate Social

Understanding individual investors’ short-term behavior toward skewness is essential for the management and investment of corporate social responsibility because the skewness-seeking behavior of individual investors, which causes a bubble in the market, makes the market as a whole more vulnerable, and it is difficult for the market to be sustainable. In the Korean stock market, we investigated whether average skewness can predict future market returns at the market level and whether the mispricing is associated with demand for the skewness of individual noise traders. Measuring the demand for skewness by the proportion of trading money of individual investors, we found that average skewness negatively predicts future market excess return when the demand for skewness is strong. The result is robust to controlling for market variance as well as other predictors. Our finding indicates that the overall market is overpriced when individual investors excessively trade to seek huge returns in spite of a small probability.

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Ownership and corporate social responsibility in Indian firms

Social Responsibility Journal ◽

10.1108/srj-02-2017-0030 ◽

2017 ◽

Vol 13 (4) ◽

pp. 714-727 ◽

Cited By ~ 6

Author(s):

Vidya Sukumara Panicker

Keyword(s):

Corporate Social Responsibility ◽

Social Responsibility ◽

Institutional Investors ◽

Family Firms ◽

Individual Investors ◽

Content Type ◽

Heterogeneous Behavior ◽

Domestic Banks ◽

Corporate Social

Purpose The purpose of this paper is to look at the association between different ownership categories and corporate social responsibility (CSR) spending of selected Indian firms. Design/methodology/approach Random-effects Tobit panel regression is performed on a panel of 4,388 firm years of 1,722 unique firms over a three-year period (2014-2016). Findings Different categories of institutional investors have different preferences for CSR spending of a firm. Promoters of business-group affiliated and unaffiliated firms also behave differently towards CSR activities of their firms. Research limitations/implications Heterogeneous behavior of institutional investors is revealed through the study. Foreign institutions and domestic banks are supportive of CSR investments of a firm. Promoters of family firms and group affiliates also diligently plan CSR activities. Practical implications Managers cannot ignore the heterogeneities of institutional investors in their investment decisions. Individual investors can align their philanthropic preferences with those of different types of institutional investors or firms. Social implications Family-owned firms play a significant role in CSR activities of emerging economies, while individual promoters are not as attracted by the reputational prospects of CSR. Originality/value This paper considers the role of heterogeneities of institutional investors in influencing CSR spending of emerging-economy firms. This heterogeneity has not been previously studied in this context.

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Do Managers Pay CSR for Private Motivation? A Dividend Tax Cut Case in Korea

Sustainability ◽

10.3390/su11154041 ◽

2019 ◽

Vol 11 (15) ◽

pp. 4041 ◽

Cited By ~ 3

Author(s):

Jun Hyeok Choi ◽

Saerona Kim ◽

D.-H. Yang

Keyword(s):

Corporate Social Responsibility ◽

Social Responsibility ◽

Personal Interest ◽

Experimental Setting ◽

Simultaneous Reduction ◽

Agency Conflict ◽

Quasi Experimental ◽

Corporate Social ◽

Dividend Tax

A CEO who has an opportunity to pursue his interest may sacrifice investors with inefficient investments such as overinvestment in corporate social responsibility (CSR). As prior researchers have suggested a possibility to detect the perk portion of CSR investment using the dividend tax cut event, we tested whether managers decreased CSR spending while accelerating dividend payouts during the Korean dividend tax cut of 2015. Consistent with the prior studies on the dividend tax cut, we discovered a pattern of incremental dividend increase for the companies of agency conflict measured by extreme CEO ownership. However, we failed to find any statistically significant simultaneous reduction in donations after 2015. This study does not provide evidence that investments in CSR of Korean firms are not due to CEOs’ personal interest-seeking. Instead, we showed that the dividend tax cut event may not work as a universally applicable quasi-experimental setting to detect management overinvestments in CSR.

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