The board of directors and corporate social performance under weak institutions

This study argues that in emerging economies where formal institutions are weak, firms pursuing shareholder value may decrease other stakeholders' interests and corporate social performance (CSP). Using data from Taiwan, an Asian emerging economy, this study finds that board ownership which aligns board members' incentives with those of shareholders and increases board members' incentives to pursue shareholder value decreases CSP, suggesting that firms pursuing shareholder value may decrease CSP in an emerging economy. However, independent outside directors, not being large shareholders, may balance shareholders' influence on the board and protect other stakeholders, which may increase CSP.