How does institutional cross‐ownership affect firm productivity? The importance of the corporate social responsibility channel

Abstract

AbstractThis paper investigates the effect of institutional cross‐ownership on firm productivity and whether this effect occurs indirectly through corporate social responsibility. Based on a sample of French firms from the 2001–2015 period, we found that institutional cross‐ownership, particularly pressure insensitive cross‐ownership, positively affects firm productivity. This result suggests that the professional knowledge and monitoring experience gained by institutional cross‐owners lead them to increase firm productivity. This positive effect is less pronounced in highly competitive product markets. The results also showed that corporate social responsibility is a channel that allows institutional cross‐owners, particularly pressure insensitive cross‐owners, to influence firm productivity. This result suggests that institutional cross‐owners drive corporate social responsibility investments leading to enhanced firm productivity.