Institutional investors’ site visits and corporate social responsibility: Implications for the extractive industries✰

Abstract

This paper examines the nexus between institutional investors’ site visits and Corporate Social Responsibility (CSR) using legitimacy theory. Drawing on 13,867 observations selected from the stock exchange market of China during the period 2010–2018, this paper provides strong empirical evidence in support of how institutional investors’ site visits are positively associated with CSR. We find that site visits, as an informative and monitoring tool, can help managers to engage in socially-responsible activities for the purpose of protecting the rights and interests of stakeholders. Furthermore, the association between site visits by institutional investors and CSR is stronger in environments where enforcement of legislation is weak and weaker religious atmospheres. The results increase our comprehension of CSR determinants and shed light on institutional investors’ governance role in improving extractive industries’ CSR performance.