A New Take on Voice: The Influence of BlackRock’s 'Dear CEO' Letters

67 Pages Posted: 18 Feb 2021

See all articles by Andrea Pawliczek

Andrea Pawliczek

University of Missouri at Columbia - School of Accountancy

A. Nicole Skinner

University of Georgia - J.M. Tull School of Accounting

Laura Wellman

Pennsylvania State University; Pennsylvania State University - Department of Accounting; Penn State University

Date Written: January 2021

Abstract

We examine whether broad-based public engagement by institutional investors influences the behavior of portfolio firms. We investigate this question in the context of BlackRock’s annual “Dear CEO” letter, which in recent years has called for portfolio firms to acknowledge and quantify the impact of environmental and regulatory factors on their firms. We find that portfolio firms’ disclosures reflect topics similar to those discussed in the letters during the post-letter period, controlling for a variety of firm and disclosure characteristics, and the occurrence of private engagements. Moreover, BlackRock appears to value these additional disclosures, as it more often votes with management on shareholder proposals during subsequent annual shareholder meetings. Finally, motivated by BlackRock’s attempts to mobilize firms toward its specific policy recommendations, we also provide some evidence that firms’ lobbying efforts become more aligned with the issues highlighted in the letter during the post-letter period, especially when firms’ share BlackRock’s policy preferences ex ante. Taken together, our evidence suggests that portfolio firms are responsive to BlackRock’s public engagement efforts.

Keywords: Institutional Ownership, Shareholder Engagement, Shareholder Voice, Disclosure, ESG, Lobbying

JEL Classification: G32, G34, M41

Suggested Citation

Pawliczek, Andrea and Skinner, Ashley Nicole and Wellman, Laura, A New Take on Voice: The Influence of BlackRock’s 'Dear CEO' Letters (January 2021). Available at SSRN: https://ssrn.com/abstract=3763042 or http://dx.doi.org/10.2139/ssrn.3763042

Andrea Pawliczek (Contact Author)

University of Missouri at Columbia - School of Accountancy ( email )

420 Cornell Hall
Columbia, MO 65211
United States

Ashley Nicole Skinner

University of Georgia - J.M. Tull School of Accounting ( email )

Athens, GA 30602
United States

Laura Wellman

Pennsylvania State University ( email )

378 Business Building
University Park, PA 16802
United States
6026225683 (Phone)

Pennsylvania State University - Department of Accounting ( email )

University Park, PA 16802-3306
United States

Penn State University ( email )

University Park, PA 16802-3306
United States

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