OWNERSHIP AND SUSTAINABILITY: THE TYPE OF SHAREHOLDER MATTERS

Abstract

The conventional view of the relationship between stock ownership and corporate social responsibility can be summarized by Milton Friedman’s argument that “the only social responsibility of business is to increase profits” (Friedman, 2007). This view posits that sustainability is a cost to the shareholders, thus considering that shareholders’ economic interest is to minimize such costs. Since then, literature has uncovered that sustainability brings long-term benefits to shareholders. The trade-off between the costs and benefits of sustainability is different depending on the type of shareholder. Therefore, we investigate which shareholders impact the firm’s sustainability. In our study, we focus on institutional, state, and family shareholders, as they are key to the sustainability performance of firms.
JEL Classification: G14, G15, G30, Q56.