ABSTRACT
Critics of the social performance of corporations frequently cite one factor that they claim militates against socially responsible management practices: the concentration of ownership by large institutional investors, and subsequent pressure upon management to maintain high short term financial returns. Institutional ownership reflects the equity owned by banks, mutual funds, pension funds, foundations, endowments, private firms, insurance companies and other third parties who hold and invest funds in trust for others. A competing perspective of efficient markets suggests that myopia theory itself is myopic, and that institutions and individuals in fact make and maintain investments in highly rational ways. The ability of institutions to influence the actions of corporations in which they have an ownership position continues to grow. Myopic institutions theory is useful in the study of corporate social performance because of widespread perceptions that investments in corporate social performance tend to be long-term.
