Is the Bandwagon Bias Effect Theory Driving Institutional Investors Impact on Corporate Social Responsibility (CSR) Practices?

Abstract

This paper employs the bandwagon bias effect theory to explain the influence of institutional investors on CSR Practices. This study focuses on Nigeria and uses the bandwagon bias theory to explore how institutional investors are being influenced by peer and society pressure to go along with the crowd to conform to CSR industrial standards. Using the balanced panel data of 174 PLCs from 2003 to 2009, the study investigates the institutional investors influence on CSR. The findings indicate a significant manifestation of relationship between them, which implies that the bandwagon effect on firm’s CSR engagement exists.