Shareholder Activism and Firms' Voluntary Disclosure of Climate Change Risks

42 Pages Posted: 22 Oct 2019

See all articles by Caroline Flammer

Caroline Flammer

Boston University

Michael W. Toffel

Harvard Business School

Kala Viswanathan

Harvard University - Business School (HBS)

Date Written: October 12, 2019

Abstract

This paper examines whether – in the absence of mandated disclosure requirements – shareholder activism can elicit greater disclosure of firms' exposure to climate change risks. We find that environmental shareholder activism increases the voluntary disclosure of climate change risks, especially if initiated by investors who are more powerful (institutional investors) or whose request has more legitimacy (long-term institutional investors). We also find that companies that voluntarily disclose climate change risks following environmental shareholder activism achieve a higher valuation, suggesting that investors value transparency with respect to climate change risks.

Keywords: shareholder activism, climate risk, climate change, corporate disclosure, corporate governance

JEL Classification: P28, G3, L2, M14, M38, Q5

Suggested Citation

Flammer, Caroline and Toffel, Michael W. and Viswanathan, Kala, Shareholder Activism and Firms' Voluntary Disclosure of Climate Change Risks (October 12, 2019). Available at SSRN: https://ssrn.com/abstract=3468896 or http://dx.doi.org/10.2139/ssrn.3468896

Caroline Flammer (Contact Author)

Boston University ( email )

Boston University Questrom School of Business
595 Commonwealth Avenue, Office 634A
Boston, MA 02215
United States

HOME PAGE: http://sites.bu.edu/cflammer/

Michael W. Toffel

Harvard Business School ( email )

Boston, MA 02163
United States
617.384.8043 (Phone)

Kala Viswanathan

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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