Don Neubaum believes companies should act like people. "Corporations also have the responsibility to do what’s right," says the assistant professor in OSU’s College of Business.
Neubaum has been investigating corporate social responsibility and institutional investment among Fortune 500 companies. In a study published last spring in the Journal of Management, he reported that companies with stronger social responsibility rankings tend to have higher levels of stock ownership by long-term institutions such as pension funds. In contrast, short-term investors, such as mutual funds and investment banks, tend to invest in firms with lower social responsibility ratings.
"Mutual funds are more likely to jump in and out their stock positions, as there is more pressure on those fund managers to gener-ate a quick return for their investors," says Neubaum. "A pension fund manager, on the other hand, is under less pressure to pro-duce immediate gains, more likely to be active in the management of the company, feel more invested, and therefore, is more likely to be concerned with a company’s social performance."
Neubaum used six different measures of social responsibility: employee relations, the environment, community relations, product characteristics, treatment of women and treatment of minorities.