Shareholder Activism and Firms' Voluntary Disclosure of Climate Change Risks
57 Pages Posted: 22 Oct 2019 Last revised: 28 Sep 2020
Date Written: October 12, 2019
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 institutional investors, and even more so if initiated by long-term institutional investors. We also find that companies that voluntarily disclose climate change risks following environmental shareholder activism achieve a higher valuation post disclosure, 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
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