Shareholder Engagement on Environmental, Social, and Governance Performance

Tamás Barkó; M. Cremers; Luc Renneboog

Shareholder Engagement on Environmental, Social, and Governance Performance

Tamás Barkó
, M. Cremers
, Luc Renneboog

Research output: Working paper › Discussion paper › Other research output

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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.

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

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 12 Responsible Consumption and Production

Keywords

investor activisim
Corporate social responsibility
socially responsible investing
environmental
social and governance (ESG)

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2017-040Submitted manuscript, 524 KB

Cite this

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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.",

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AU - Cremers, M.

AU - Renneboog, Luc

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N2 - 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.

AB - 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.

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KW - Corporate social responsibility

KW - socially responsible investing

KW - environmental

KW - social and governance (ESG)

M3 - Discussion paper

VL - 2017-040

T3 - CentER Discussion Paper

BT - Shareholder Engagement on Environmental, Social, and Governance Performance

PB - CentER, Center for Economic Research

CY - Tilburg

ER -

Shareholder Engagement on Environmental, Social, and Governance Performance

Abstract

Publication series

UN SDGs

Keywords

Access to Document

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Cite this