Review of Financial Studies (RFS), Volume 28, Issue 12, pp. 3225-3268, 2015.
55 Pages Posted: 1 Oct 2012 Last revised: 19 Mar 2016
Date Written: August 7, 2015
We analyze an extensive proprietary database of corporate social responsibility engagements with U.S. public companies from 1999-2009. Engagements address environmental, social, and governance concerns. Successful (unsuccessful) engagements are followed by positive (zero) abnormal returns. Companies with inferior governance and socially conscious institutional investors are more likely to be engaged. Success in engagements is more probable if the engaged firm has reputational concerns and higher capacity to implement changes. Collaboration among activists is instrumental in increasing the success rate of environmental/social engagements. After successful engagements, particularly on environmental/social issues, companies experience improved accounting performance and governance and increased institutional ownership.
Keywords: Engagement, corporate social responsibility (CSR), environmental, social, and governance (ESG), socially responsible investing (SRI), universal ownership, shareholder activism
JEL Classification: G15, G23, G34
Suggested Citation: Suggested Citation