The effect of institutional dual holdings on CSR performance

This project has been published in the Journal of Sustainable Finance & Investment and is co-authored with Alexander Bassen (University of Hamburg, Germany), Thomas Kaspereit (University of Luxembourg), Kerstin Lopatta (University of Hamburg, Germany), and Daniel Buchholz (University of Hamburg, Germany).


This study sheds light on agency conflicts between creditors and shareholders and their effect on a firm’s corporate social responsibility (CSR) performance. We find that the presence of institutional investors which simultaneously hold debt and equity claims in the same firm, so-called dual holders, leads to an increase in CSR performance by the firm that is dual-held (the dual holding firm). Using institutional mergers between separate lenders and equity holders as a natural experiment involving the shareholder-creditor conflict, we find that firms which exhibit dual ownership for the first time increase their CSR activities to a greater extent than a matched control group. In line with the previous literature, we interpret our findings as evidence that dual holders internalise agency conflicts. Thus, we find that a reduction in agency conflicts between creditors and shareholders, partly achieved by dual holders, positively affects the CSR activities of dual holdings.

To access the full paper, click here.

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