Corporate Governance Symposium

University of Delaware Weinberg Center/ECGI

Corporate Governance Symposium

  • 16 March 2021
  • Online

Tuesday, 16 March 2021

09:45 – 15:00 EDT | 14:45 – 20:00 CET

 

Organisers

Laura Field (University of Delaware and ECGI)

Fei Xie (University of Delaware and ECGI)

 

Download programme

 

ABOUT THIS EVENT

The John L. Weinberg Center for Corporate Governance and the Department of Finance at the Lerner College of Business and Economics, at the University of Delaware, hosted its 2021 annual corporate governance symposium in collaboration with the European Corporate Governance Institute (ECGI). The focus of the Symposium was “Critical Issues for Boards and Investors in 2021.”

The symposium featured the two winning papers of the 2021 John L. Weinberg/IRRCi Research Paper Award competition which seeks to highlight innovative research and includes an award of USD 10,000.

The Covid-19 pandemic has increased the focus on various environmental, social and governance (ESG) issues by investors and other stakeholders. The papers included in the symposium collectively address topics within the area of ESG that are of critical importance in 2021 for boards of directors and investors.

The winning papers, ‘The ESG-Innovation Disconnect: Evidence from Green Patenting’ (Cohen, Gurun, Nguyen) and ‘The Distribution of Voting Rights to Shareholders’ (Fos, Holderness) was presented and discussed with the semi-finalist’s papers for the prize. 

 

 

Supported by

             

Tuesday 16 March 14:45 (CET) / 09:45 (EST)

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Welcome and Introductions

Time:
14:45h
- 15:00h

Speakers

Fellow Research Member Institutional Member Board Member
14:55
- 15:00

Introduction of Morning Papers and Presentation of Winners of the John L. Weinberg/IRRCi Research Paper Award Competition

Speakers:
Back to full programme

Introduction of Morning Papers and Presentation of Winners of the John L. Weinberg/IRRCi Research Paper Award Competition

Time:
14:55h
- 15:00h

Speakers

Back to full programme

The ESG-Innovation Disconnect: Evidence from Green Patenting

Time:
15:00h
- 15:30h

No firm or sector of the global economy is untouched by innovation. In equilibrium, innovators will flock to (and innovation will occur where) the returns to innovative capital are highest. In this project, we first document a startling shift in the direction of green patent production. More specifically, we show a shift in the United States’ green innovation landscape over the last 15 years: the majority of recent green patent production is not driven by firms with higher ESG score firms, firms that are commonly favored by ESG funds. Instead, it is driven by firms that are explicitly excluded from ESG funds’ investment universe: namely existing oil, gas, and energy producers. These energy producers produce more, and significantly higher quality, green innovation. Our findings raise important questions as to whether the current exclusions of many ESG-focused policies are optimal, or whether reward-based incentives would lead to more efficient innovative outcomes.

Speakers

Discussants

Conference Documents

Back to full programme

Responsible Institutional Investing Around the World

Time:
15:30h
- 16:00h

We explore a novel survey on responsible investing by institutional investors around the world and match it to archival data on their equity portfolio holdings. We document that institutions that publicly commit to responsible investing exhibit better environmental, social, and governance (ESG) portfolio level scores (“footprints”) but this is not the case for US-domiciled institutions. In fact, US investors that committed but only partially implement ESG strategies (e.g., screening, integration, engagement) exhibit worse ESG footprints than uncommitted investors, consistent with some “greenwashing.” Finally, we document that responsible investing does not enhance portfolio returns but reduces risk.

Speakers

Discussants

Conference Documents

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The Real Effects of Environmental Activist Investing

Time:
16:00h
- 16:30h

We study the real effects of environmental activist investing. Using plant-level data, we find that targeted firms reduce their toxic releases, greenhouse gas emissions, and cancer-causing pollution. Improvements in air quality within a one-mile radius of targeted plants suggest potentially important externalities to local economies. These improvements come through increased capital expenditures on new abatement initiatives. We rule out alternative explanations of decline in production, reporting biases, and forms of selection, while also providing evidence supporting the external validity of environmental activism. Overall, our study suggests that engagements are an effective tool for long-term shareholders to address climate change risks.

Speakers

Discussants

Conference Documents

Back to full programme

Coordinated Engagements

Time:
16:30h
- 17:00h

We study the nature of and outcomes from coordinated engagements by a prominent international network of long-term shareholders cooperating to influence firms on environmental and social issues. A two-tier engagement strategy, combining lead investors with supporting investors, is effective in successfully achieving the stated engagement goals and is followed by improved target performance. An investor is more likely to lead the collaborative dialogue when the investor’s stake in and exposure to the target firm are higher, and when the target is domestic. Success rates are elevated when lead investors are domestic, and when the investor coalition is capable and influential.

Speakers

Discussants

Conference Documents

17:00
- 17:55

Break

17:55
- 18:00

Introduction of Afternoon Papers and Presentation of Winners of the John L. Weinberg/IRRCi Research Paper Award Competition

Speakers:
Back to full programme

Introduction of Afternoon Papers and Presentation of Winners of the John L. Weinberg/IRRCi Research Paper Award Competition

Time:
17:55h
- 18:00h

Speakers

18:00
- 18:30

The Big Three and Board Gender Diversity: The Effectiveness of Shareholder Voice

Speakers:
Discussant:
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The Big Three and Board Gender Diversity: The Effectiveness of Shareholder Voice

Time:
18:00h
- 18:30h

In 2017, “The Big Three” institutional investors (BlackRock, State Street, and Vanguard) launched campaigns to increase gender diversity on corporate boards. Using difference-in-differences estimation, we find that their campaigns led firms to add at least 2.5 times as many female directors in 2019 as they had in 2016 and increased a female director’s likelihood of holding a key position on the board, including chairperson of the nominating and audit committees. Evidence suggests that firms achieved these gains by relying less on their existing networks to identify qualified candidates and by placing less emphasis on candidates’ executive and board experience. Our results highlight the potential for shareholder advocacy to expand women’s participation in corporate leadership and the ability of index investors to influence firms’ governance structures.

Speakers

Discussants

Conference Documents

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The Distribution of Voting Rights to Shareholders

Time:
18:30h
- 19:00h

This is the first comprehensive study of the distribution of voting rights to shareholders. Only those owning stock on the record date may vote. Managers, however, typically reveal that date after the fact. With controversial votes, managers are more likely to do the opposite, and this is associated with a lower passage rate for shareholder-initiated proposals. The NYSE sells record-date information before the fact to select investors. When stocks go ex vote, prices decline which suggests that investors are buying marginal votes. With controversial votes, prices decline by over 50 basis points and trading volume surges immediately thereafter.

Speakers

Discussants

Conference Documents

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Trading and Shareholder Democracy

Time:
19:00h
- 19:30h

The recent shift of power from corporate boards to shareholder meetings applies the logic of political democracy: it aligns the preferences of those who make decisions with those for whom decisions are made a form of corporate democracy. However, unlike the political setting, a key feature of the corporate setting is the existence of the market for shares, which allows investors to choose their ownership stakes and makes the voter base endogenous. In this paper, we analyze the two-way feedback loop between shareholder voting and trading in the stock market, compare the effectiveness of shareholder voting with delegation to the board, and study the implications of index investing and ESG proposals.

Speakers

Discussants

Conference Documents

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Disloyal Managers and Shareholders’ Wealth

Time:
19:30h
- 20:00h

The prohibition against fiduciaries appropriating business opportunities from their companies is a fundamental part of the duty of loyalty, the expectation of which is integral to U.S. corporate governance. However, starting in 2000, several states, including Delaware, allowed boards to waive this duty. Exploiting the staggered passage of waiver laws, we show that this weakening of fiduciary duty has significantly decreased firms’ investment in innovation. Firms covered by waiver laws invest less in R&D, produce fewer and less valuable patents. Remaining innovation activities contribute less to firm value, a fact confirmed by the market reaction when firms reveal their curtailed internal growth opportunities by announcing acquisitions.

Speakers

Discussants

Conference Documents

Speakers

Fellow Research Member Institutional Member Board Member

Presentations

Back to all presentations

Welcome and Introductions

Time:
14:45h
- 15:00h

Speakers

Fellow Research Member Institutional Member Board Member

Introduction of Morning Papers and Presentation of Winners of the John L. Weinberg/IRRCi Research Paper Award Competition

Back to all presentations

Introduction of Morning Papers and Presentation of Winners of the John L. Weinberg/IRRCi Research Paper Award Competition

Time:
14:55h
- 15:00h

Speakers

The ESG-Innovation Disconnect: Evidence from Green Patenting

Back to all presentations

The ESG-Innovation Disconnect: Evidence from Green Patenting

Time:
15:00h
- 15:30h

No firm or sector of the global economy is untouched by innovation. In equilibrium, innovators will flock to (and innovation will occur where) the returns to innovative capital are highest. In this project, we first document a startling shift in the direction of green patent production. More specifically, we show a shift in the United States’ green innovation landscape over the last 15 years: the majority of recent green patent production is not driven by firms with higher ESG score firms, firms that are commonly favored by ESG funds. Instead, it is driven by firms that are explicitly excluded from ESG funds’ investment universe: namely existing oil, gas, and energy producers. These energy producers produce more, and significantly higher quality, green innovation. Our findings raise important questions as to whether the current exclusions of many ESG-focused policies are optimal, or whether reward-based incentives would lead to more efficient innovative outcomes.

Speakers

Discussants

Conference Documents

Back to all presentations

Responsible Institutional Investing Around the World

Time:
15:30h
- 16:00h

We explore a novel survey on responsible investing by institutional investors around the world and match it to archival data on their equity portfolio holdings. We document that institutions that publicly commit to responsible investing exhibit better environmental, social, and governance (ESG) portfolio level scores (“footprints”) but this is not the case for US-domiciled institutions. In fact, US investors that committed but only partially implement ESG strategies (e.g., screening, integration, engagement) exhibit worse ESG footprints than uncommitted investors, consistent with some “greenwashing.” Finally, we document that responsible investing does not enhance portfolio returns but reduces risk.

Speakers

Discussants

Conference Documents

Back to all presentations

The Real Effects of Environmental Activist Investing

Time:
16:00h
- 16:30h

We study the real effects of environmental activist investing. Using plant-level data, we find that targeted firms reduce their toxic releases, greenhouse gas emissions, and cancer-causing pollution. Improvements in air quality within a one-mile radius of targeted plants suggest potentially important externalities to local economies. These improvements come through increased capital expenditures on new abatement initiatives. We rule out alternative explanations of decline in production, reporting biases, and forms of selection, while also providing evidence supporting the external validity of environmental activism. Overall, our study suggests that engagements are an effective tool for long-term shareholders to address climate change risks.

Speakers

Discussants

Conference Documents

Back to all presentations

Coordinated Engagements

Time:
16:30h
- 17:00h

We study the nature of and outcomes from coordinated engagements by a prominent international network of long-term shareholders cooperating to influence firms on environmental and social issues. A two-tier engagement strategy, combining lead investors with supporting investors, is effective in successfully achieving the stated engagement goals and is followed by improved target performance. An investor is more likely to lead the collaborative dialogue when the investor’s stake in and exposure to the target firm are higher, and when the target is domestic. Success rates are elevated when lead investors are domestic, and when the investor coalition is capable and influential.

Speakers

Discussants

Conference Documents

Introduction of Afternoon Papers and Presentation of Winners of the John L. Weinberg/IRRCi Research Paper Award Competition

Back to all presentations

Introduction of Afternoon Papers and Presentation of Winners of the John L. Weinberg/IRRCi Research Paper Award Competition

Time:
17:55h
- 18:00h

Speakers