Although corporate social responsibility (CSR) decoupling has become a widely criticized management practice, research on how to govern this phenomenon from the investor level is still lacking. With the increasing prevalence of common institutional ownership, this paper aims to fill the gap in the existing literature by exploring whether common institutional investor can effectively curb the unethical behavior of CSR decoupling. Using data from listed firms in China from 2009 to 2022, we find that common institutional ownership reduces CSR decoupling and plays a coordinated governance role. Our main conclusion holds after considering a series of robustness checks. Moreover, this role is more pronounced for non-state-owned enterprises, CSR-intensive firms, and regions with a less effici ent legal environment. Channel tests suggest that common owners govern CSR decoupling by delegating executives, threatening to exit, and reducing controlling shareholders’ selfinterest. Further analysis suggests that common owners with greater market power and long-term investment horizons can govern CSR decoupling more effectively. Overall, our research offers new insights into the field of finance and ethics by highlighting the potential impact of common ownership on corporate ethical behavior.
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