Purpose This study aims to investigate the impact of free-float share concentration, relative to strategic shareholdings by governments, foreign investors and corporations, on corporate social responsibility (CSR) performance. Additionally, this study examines how these impacts are moderated by firms’ cross-listing on foreign stock exchanges. Design/methodology/approach This study uses a sample of firms listed on stock exchanges in 27 high-income and 14 low-income countries’ markets from 2010 to 2022. Fixed-effects panel regression models are used for the empirical analysis, supported by several robustness tests. Findings The effects of the free-float share ratio and foreign strategic shareholdings on CSR performance are statistically significant and highly robust across different model specifications. These relationships also hold in both high- and low-income markets. Furthermore, cross-listing on foreign stock exchanges significantly moderates the effects of both variables on CSR performance. In contrast, the effects of government strategic shareholding and corporate strategic cross-holdings on CSR performance vary across markets, with no consistent pattern observed. Research limitations/implications The legitimacy pressure exerted by public (individual) ownership, represented by free-float shares, plays a significant role in shaping firms’ CSR decisions. It serves as an alternative governance mechanism that helps mitigate the potential agency conflicts associated with strategic shareholdings. Practical implications A balanced mix of free-float and strategic holdings can act as soft regulation, promoting broader stakeholder interests over narrow shareholder gains. Originality/value This study advances the shareholding literature by examining the emerging legitimacy role of dispersed public (individual) ownership, in contrast to the mainstream focus on strategic shareholdings in the existing literature.
Sada et al. (Sat,) studied this question.