The role of directors representing institutional ownership in sustainable development through corporate social responsibility reporting

In this paper, we analyze the effect that directors representing controlling shareholders, specifically institutional investors, have on corporate social responsibility (CSR) given that these investors are the core shareholders in civil law countries, owing to their high presence on boards. Thus, we analyze the effect of institutional directors on CSR disclosure, but also the impact of their classification between pressure-sensitive and pressure-resistant institutional directors, depending on if they maintain only an investment relationship with the firm or both an investment and a commercial link, respectively. We hypothesize that these directors may perform opposite roles (monitoring or aligning with managers) regarding CSR disclosure. We show a curvilinear relationship between institutional directors/pressure-resistant directors and CSR reporting, suggesting the two opposite roles mentioned. However, pressure-sensitive directors do not affect CSR disclosure. These findings indicate that there is an association between board members and strategic decisions. Moreover, our evidence shows that institutional directors do not act in an identical way. Finally, the enhancement of corporate governance depends on the proportion of institutional and pressure-resistant directors on boards.