Corporate Social Responsibility and Corporate Finance in Japan by Megumi Suto & Hitoshi Takehara

Author:Megumi Suto & Hitoshi Takehara
Language: eng
Format: epub
Publisher: Springer Singapore, Singapore

5.4 Regression Analyses

5.4.1 Effects of Ownership on CSP

The high correlation between the CSP indexes and firm characteristic variables raises suspicions regarding the findings reported in Sect. 5.3. To check the robustness of our findings on the relationship between stock ownership and CSP, we conduct a multivariate regression analysis in which we employ the control variables discussed in Sect. 5.3.2. This regression model is specified as

(5.1)

In model (5.1), dependent variable y j,t is a composite CSP or one of the five CSP dimensional indexes of firm j in year t. Independent variable x j,t is one of (a) shares owned by foreign corporations, (b) shares owned by Japanese corporations, or (c) shares owned by individuals of firm j in year t. ROA, DR, GTA, Turn, Vol3Y, BPR, and FDR are control variables. DSizei,j,t is a size dummy that equals 1 if firm j belongs to the i-th size ranked portfolio in year t, and 0 otherwise. DSectori,j is a sector dummy variable that equals 1 if firm j belongs to the i-th sector, and 0 otherwise. Finally, DYear j,t represents a dummy variable to indicate each year we evaluate, where t = 2008,…, 2016.

To mitigate endogeneity resulting from potential possible reverse causality between CSP and ownership variables, we perform two-stage least square regression analysis in which we use a 1-year lagged ownership variable and a dummy (NOTSE1) as instrumental variables.4 NOTSE1 takes the value of 1 if the firm is not listed on the TSE’s First Section, and 0 if the firm is listed on the First Section.5

Table 5.6 reports the results of the regression analyses for shareholding level of different investor groups with both composite CSP and five CSP dimensional indexes serving as the dependent variables. For composite CSP and all dimensional CSP, foreign corporate ownership is positively related to CSP. This result supports Hypothesis 1. Moreover, the coefficient associated with the CSP of foreign ownership is much larger than that of domestic corporate ownership. Concerning individual ownership, the coefficients of composite CSP and all dimensional CSP are significantly negative. Therefore, Hypothesis 2 is supported. For the analyses in which the CSP dimensions are used as dependent variables, the results do not refute Hypothesis 3, as the coefficients are varied. Concerning the effects of ownership structure on CSP for 2007–2016, we obtain consistent results with those for 2007–2011 in Suto and Takehara (2018).Table 5.6Effects of stock ownership structure on CSP

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