Voting for Socially Responsible Corporate Policies

46 Pages Posted: 1 Apr 2022 Last revised: 23 Feb 2023

See all articles by Adam Meirowitz

Adam Meirowitz

David Eccles School of Business, University of Utah

Shaoting Pi

Ivy College of Business, Iowa State University

Matthew C. Ringgenberg

University of Utah - Department of Finance

Date Written: February 22, 2023

Abstract

We examine voting for corporate policies when voters face a trade-off between maximizing firm value and implementing social objectives (like minimizing pollution). We show voting can aggregate preferences and lead to stable policies when a firm cares about one social objective in addition to firm value. But when voters care about two or more social objectives it can lead to governance indeterminacy or volatility in firm policies. We show an agenda setter (e.g., activist investor or CEO) can influence policy choice, but this power is not absolute. Our findings have implications for the design and regulation of proxy voting rules.

Keywords: Corporate governance, ESG, Shareholder Voting, Social Choice Theory, Socially Responsible Investing, Sustainability

JEL Classification: G12, G14

Suggested Citation

Meirowitz, Adam and Pi, Shaoting and Ringgenberg, Matthew C., Voting for Socially Responsible Corporate Policies (February 22, 2023). Available at SSRN: https://ssrn.com/abstract=4057792 or http://dx.doi.org/10.2139/ssrn.4057792

Adam Meirowitz

David Eccles School of Business, University of Utah ( email )

Garff Building
Salt Lake City, UT 84112
United States
6094391432 (Phone)

Shaoting Pi

Ivy College of Business, Iowa State University ( email )

2330 Gerdin Business Building
Ames, IA 50011
United States

Matthew C. Ringgenberg (Contact Author)

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States

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