Abstract
We study investor activism promoting environmental, social and governance (ESG)
improvements using 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 postengagement, while the (ex ante) lowest ESG quartile earns an extra 7.5% over 1 year.
improvements using 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 postengagement, while the (ex ante) lowest ESG quartile earns an extra 7.5% over 1 year.
| Original language | English |
|---|---|
| Place of Publication | Tilburg |
| Publisher | CentER, Center for Economic Research |
| Number of pages | 58 |
| Volume | 2017-040 |
| Publication status | Published - 21 Sept 2017 |
Publication series
| Name | CentER Discussion Paper |
|---|---|
| Volume | 2017-040 |
Keywords
- investor activisim
- Corporate social responsibility
- socially responsible investing
- environmental
- social and governance (ESG)