Legal Origins and Institutional Investors' Support for CSR

Using data on approximately 2,500 environmental and social shareholder proposals, we show that institutional investors from civil law countries use their voting power to positively influence the CSR of common law firms. A one percentage point increase in civil law institutional ownership increases the percentage of votes in favor of U.S. environmental and social proposals by 0.70 percentage points. Exploring their motive for doing so, we provide evidence that institutional investors from civil law countries are more likely to support CSR for financial rather than social motives. In comparison to institutional investors from common law countries, we argue that institutional investors from civil law countries have a more enlightened view of value maximization: they believe that the creation of stakeholder value ultimately benefits shareholder value