Shareholder Engagement on Environmental, Social, and Governance Performance

Shareholder Engagement on Environmental, Social, and Governance Performance

Tamas Barko, Martijn Cremers, Luc Renneboog

Series number :

Serial Number: 
509/2016

Date posted :

June 01 2017

Last revised :

June 17 2017
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Keywords

  • investor activism; corporate social responsibility; socially responsible investing (SRI); engagement; environmental • 
  • social and governance (ESG)

We study investor activism promoting environmental, social and governance (ESG) improvements by means of a proprietary dataset covering 660 companies globally over 2005-2014. Targets have a higher market share, analyst coverage, stock returns, and liquidity. The engagements lead to significant ESG rating adjustments.

Activism is more likely to succeed for companies with a good ex ante ESG track record, and with lower ownership concentration and growth. Successful engagements positively affect sales growth, without changing profitability. Targets outperform matched firms by 2.7% over 6 months post-engagement, while the (ex ante) lowest ESG quartile earns an extra 7.5% over 1 year.

Authors

Mr.
Real name:
Tamas Barko
University of Mannheim
Real name: 
Martijn Cremers