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Firms’ socially responsible activities: the role of the Big Three

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  • Lukai Yang

    (AR Sanchez, Jr. School of Business, Texas A&M International University)

Abstract

This paper examines the power and corporate governance significance of the three largest index fund managers, BlackRock, Vanguard, and State Street Global Advisors, commonly referred to as the “Big Three.” I provide evidence that they play a key role in strengthening the sustainable and socially responsible activities of portfolio companies. In this paper, I find that the Big Three are positively associated with the overall ESG score, environmental subscore, and social subscore. Interestingly, greater Big Three ownership leads to a higher vote-for percentage of SRI-related proposals, implying that voting is a channel through which they exert influence. My findings highlight the Big Three’s commitment to tackling ESG-related issues, in which they believe that integration of sustainability-related information can help portfolio risk management, and their ability to steer corporate decision-making.

Suggested Citation

  • Lukai Yang, 2023. "Firms’ socially responsible activities: the role of the Big Three," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 47(4), pages 859-883, December.
    • Handle: RePEc:spr:jecfin:v:47:y:2023:i:4:d:10.1007_s12197-023-09622-1
    DOI: 10.1007/s12197-023-09622-1
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    More about this item

    Keywords

    The Big Three; Sustainability; ESG; SRI-related proposals;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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