Environmental, Social and Governance Proposals and Shareholder Activism

Posted: 22 Jun 2016 Last revised: 15 Jan 2020

See all articles by Jiaying Wei

Jiaying Wei

Southwestern University of Finance and Economics (SWUFE)

Date Written: June 21, 2016

Abstract

This paper studies shareholder activism through environmental, social and governance (ESG) proposals over the period 1996 to 2015. Larger, more mature firms with higher institutional holdings are more easily targeted by these proposals. Target firms spend less on capital expenditure and research and development. An equal-weighted portfolio of target firms earns a four-factor alpha of 0.22% on the date of proposal filing. Target firms with subsequent successful proposals earn higher buy-and-hold abnormal returns over the event period and better long-term operating performances than firms whose proposals subsequently fail. These findings provide new evidence on the mechanism and effect of shareholder activism on ESG issues, and support the view that corporate social responsibility is a value-enhancing strategic opportunity rather than an agency problem.

Keywords: shareholder activism, corporate social responsibility, sustainable responsible investing

JEL Classification: G14, G23, G34

Suggested Citation

Wei, Jiaying, Environmental, Social and Governance Proposals and Shareholder Activism (June 21, 2016). 29th Australasian Finance and Banking Conference 2016, Available at SSRN: https://ssrn.com/abstract=2798943 or http://dx.doi.org/10.2139/ssrn.2798943

Jiaying Wei (Contact Author)

Southwestern University of Finance and Economics (SWUFE) ( email )

No. 55 Guang Hua Cun Street
Institute of Financial Studies
Chengdu, 610000
China

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