Voting for Socially Responsible Corporate Policies

39 Pages Posted: 1 Apr 2022

See all articles by Adam Meirowitz

Adam Meirowitz

David Eccles School of Business, University of Utah

Shaoting Pi

University of Utah - Department of Finance

Matthew C. Ringgenberg

University of Utah - Department of Finance

Date Written: March 14, 2022

Abstract

We theoretically examine voting for corporate policies when shareholders or board members face a trade-off between maximizing firm value and implementing social objectives (like minimizing pollution). If voters care about one social objective, we show that voting can successfully aggregate preferences and lead to stable policy choices. However, several challenges emerge when voters care about two or more social objectives -- voting by majority rule will not typically identify stable choices, policies will depend on the process by which they are proposed, and the volatility of firm choices may be higher. Our findings suggest corporate governance will decline in quality if decision makers care about too many objectives.

Keywords: Corporate governance, ESG, Shareholder Voting, Social Choice Theory, Socially Responsible Investing, Sustainability

JEL Classification: G12, G14

Suggested Citation

Meirowitz, Adam and Pi, Shaoting and Ringgenberg, Matthew C., Voting for Socially Responsible Corporate Policies (March 14, 2022). Available at SSRN: https://ssrn.com/abstract=4057792 or http://dx.doi.org/10.2139/ssrn.4057792

Adam Meirowitz

David Eccles School of Business, University of Utah ( email )

Garff Building
Salt Lake City, UT 84112
United States
6094391432 (Phone)

Shaoting Pi

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States

Matthew C. Ringgenberg (Contact Author)

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
134
Abstract Views
633
rank
295,044
PlumX Metrics