Institutional Ownership and Corporate Social Performance: Empirical Evidence from Indonesian Companies

Abstract

Prior research on the relationships of institutional ownership and corporate social responsibility 
has focused on North American (U.S. and Canada) and European companies.  With the passage 
of Indonesian Law No. 40 in 2007, Indonesian companies are now obligated to conduct CSP.  
As these companies objected to the passage of this law, awareness of how CSP may benefit 
Indonesian companies in terms of its positive impact on institutional investors needs to be in
vestigated.  Thus, this paper examines the relationships of IO and CSP for Indonesian compa
nies.  Unfortunately, contrary to the results for North American and European companies, we 
found no relationships between institutional ownership and corporate social responsibility for 
Indonesian companies.  This finding suggests that most institutional investors do not include 
CSP as part of their investment decisions.