This study investigates how diverse European legal systems and financial structures influence corporate social and environmental responsibility. The argument is developed by means of a framework that integrates legal systems and financial structures. Hypotheses relating to environmental responsibility have been tested using Innovest data gathered between 2002 and 2007 from 645 companies in 16 countries; and hypotheses relating to social responsibility have been tested using Innovest data gathered between 2004 and 2007 from 600 companies. The findings demonstrate that legal systems (...) influence corporate responsibility (CR) in both social and environmental spheres. They also support the claim that corporations are more likely to act in environmentally responsible ways when there are strong and well-enforced state regulations in place to ensure such behavior. Company size is shown to have a greater impact on CR than either excess cash or performance. Large companies tend to be more visible than small ones do, and society expects them to behave in a more socially and environmentally responsible manner regardless of their financial performance or available cash. Finally, these findings support the hypothesis that capital structure significantly influences CR: companies with a high number of publicly held shares and a low percentage of debt are more likely than others to commit themselves to social and environmental activities. (shrink)

This article studies institutional investor allocations to the socially responsible asset class. We propose two elements influence socially responsible institutional investment in private equity: internal organizational structure, and internationalization. We study socially responsible investments from Dutch institutional investments into private equity funds, and compare socially responsible investment across different asset classes and different types of institutional investors (banks, insurance companies, and pension funds). The data indicate socially responsible investment in private equity is 40–50% more common when the decision to implement (...) such an investment plan is centralised with a single chief investment officer. Socially responsible investment in private equity is also more common among institutional investors with a greater international investment focus, and less common among fund-of-fund private equity investments. (shrink)