Shareholder Engagement on Environmental, Social, and Governance Performance

63 Pages Posted: 31 May 2017 Last revised: 5 Sep 2018

See all articles by Tamas Barko

Tamas Barko

Prime Capital AG

Martijn Cremers

University of Notre Dame; ECGI

Luc Renneboog

Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)

Date Written: September 2018

Abstract

We study investor activism promoting environmental, social and governance (ESG) improvements using a proprietary dataset. Targets have a higher market share, analyst coverage, stock returns, and liquidity. The engagements lead to ESG rating adjustments. Activism is more likely to succeed when targets have a good ex ante ESG track record, lower ownership concentration and growth. Successful engagements positively affect sales growth, without changing profitability. A portfolio of targeted firms earns superior returns to that of matched firms. E.g., targets in the ex ante lowest ESG quartile outperform non-engaged peers by 4.7%. Similarly, successful engagements generate higher returns than unsuccessful ones.

Keywords: activism; corporate social responsibility; socially responsible investing (SRI); engagement; environmental, social and governance (ESG)

JEL Classification: G15, G23, G32, G34, G39

Suggested Citation

Barko, Tamas and Cremers, K. J. Martijn and Renneboog, Luc, Shareholder Engagement on Environmental, Social, and Governance Performance (September 2018). CentER Discussion Paper Series No. 2017-040, European Corporate Governance Institute (ECGI) - Finance Working Paper No. 509/2017 , TILEC Discussion Paper No. DP 2017-021, Available at SSRN: https://ssrn.com/abstract=2977219 or http://dx.doi.org/10.2139/ssrn.2977219

Tamas Barko

Prime Capital AG ( email )

Frankfurt
Germany

K. J. Martijn Cremers (Contact Author)

University of Notre Dame ( email )

P.O. Box 399
Notre Dame, IN 46556-0399
United States

ECGI ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Luc Renneboog

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Warandelaan 2
5000 LE Tilburg
Netherlands
+13 31 466 8210 (Phone)
+13 31 466 2875 (Fax)

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
1,267
Abstract Views
4,971
rank
16,840
PlumX Metrics