ES Risks and Shareholder Voice

Yazhou Ellen He; Bige Kahraman; Michelle Lowry

doi:10.1093/rfs/hhad033

ES Risks and Shareholder Voice

Yazhou Ellen He
, Bige Kahraman
, Michelle Lowry

A&F General

Research output: Contribution to journal › Article › peer-review

Abstract

We examine whether shareholder votes in environmental and social (ES) proposals are informative about firms’ ES risks. ES proposals are unique in that they nearly always fail. We examine whether mutual funds’ support for these failed proposals contains information about the ES risks that firms face. Higher support in failed ES proposals predicts subsequent ES incidents and the effects of these incidents on shareholder value. Examining the detailed records of fund votes, we find that agency frictions between a group of shareholders contribute to proposal failure.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online

Original language	English
Pages (from-to)	4824–4863
Number of pages	40
Journal	The Review of Financial Studies
Volume	36
Issue number	12
Early online date	26 May 2023
DOIs	https://doi.org/10.1093/rfs/hhad033
Publication status	Published - 1 Dec 2023

UN SDGs

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

SDG 12 Responsible Consumption and Production
SDG 16 Peace, Justice and Strong Institutions

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10.1093/rfs/hhad033Licence: CC BY

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AB - We examine whether shareholder votes in environmental and social (ES) proposals are informative about firms’ ES risks. ES proposals are unique in that they nearly always fail. We examine whether mutual funds’ support for these failed proposals contains information about the ES risks that firms face. Higher support in failed ES proposals predicts subsequent ES incidents and the effects of these incidents on shareholder value. Examining the detailed records of fund votes, we find that agency frictions between a group of shareholders contribute to proposal failure.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online

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ES Risks and Shareholder Voice

Abstract

UN SDGs

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