Review of Financial Studies Vol. 36 No. 12 2023

ES Risks and Shareholder Voice

Yazhou Ellen He¹; Bige Kahraman²; Michelle Lowry³

¹ University of Manchester , UK · ² University of Oxford , UK and CEPR · ³ Drexel University , USA

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.

DOI

10.1093/rfs/hhad033

Volume

36

Issue

12

Pages

4824-4863

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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