IDEAS home Printed from https://ideas.repec.org/a/eee/corfin/v89y2024ics0929119924001159.html

The value impact of climate and non-climate environmental shareholder proposals

Author

Listed:
  • Berkman, Henk
  • Jona, Jonathan
  • Lodge, Joshua
  • Shemesh, Joshua

Abstract

We study the value impact of environmental shareholder proposals (ESPs) for Russell 3000 firms from 2006 to 2021. We distinguish between climate-dedicated ESPs and non-climate ESPs covering other environmental topics. We use two approaches to evaluate management's ability and willingness to select value-enhancing ESPs and reject value-destroying ESPs: (i) cumulative abnormal returns around the final proxy filing date and (ii) a regression discontinuity design around the voting threshold at the annual general meeting. Our results suggest that management has screening ability for ESPs, especially for climate proposals, and that investors and managers share common objectives in environmental activism.

Suggested Citation

  • Berkman, Henk & Jona, Jonathan & Lodge, Joshua & Shemesh, Joshua, 2024. "The value impact of climate and non-climate environmental shareholder proposals," Journal of Corporate Finance, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:corfin:v:89:y:2024:i:c:s0929119924001159
    DOI: 10.1016/j.jcorpfin.2024.102653
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0929119924001159
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jcorpfin.2024.102653?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Zacharias Sautner & Laurence Van Lent & Grigory Vilkov & Ruishen Zhang, 2023. "Firm‐Level Climate Change Exposure," Journal of Finance, American Finance Association, vol. 78(3), pages 1449-1498, June.
    2. Vicente Cuñat & Mireia Giné & Maria Guadalupe, 2016. "Say Pays! Shareholder Voice and Firm Performance," Review of Finance, European Finance Association, vol. 20(5), pages 1799-1834.
    3. Laurent Bach & Daniel Metzger, 2019. "How Close Are Close Shareholder Votes?," The Review of Financial Studies, Society for Financial Studies, vol. 32(8), pages 3183-3214.
    4. Alex Edmans & Vivian W. Fang & Katharina A. Lewellen, 2017. "Equity Vesting and Investment," The Review of Financial Studies, Society for Financial Studies, vol. 30(7), pages 2229-2271.
    5. Berkman, Henk & Jona, Jonathan & Soderstrom, Naomi, 2024. "Firm-specific climate risk and market valuation," Accounting, Organizations and Society, Elsevier, vol. 112(C).
    6. Carhart, Mark M, 1997. "On Persistence in Mutual Fund Performance," Journal of Finance, American Finance Association, vol. 52(1), pages 57-82, March.
    7. Jie Cao & Hao Liang & Xintong Zhan, 2019. "Peer Effects of Corporate Social Responsibility," Management Science, INFORMS, vol. 65(12), pages 5487-5503, December.
    8. Freund, Steven & Nguyen, Nam H. & Phan, Hieu V., 2023. "Shareholder Litigation and Corporate Social Responsibility," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 58(2), pages 512-542, March.
    9. Vicente Cuñat & Mireia Gine & Maria Guadalupe, 2012. "The Vote Is Cast: The Effect of Corporate Governance on Shareholder Value," Journal of Finance, American Finance Association, vol. 67(5), pages 1943-1977, October.
    10. Caroline Flammer, 2015. "Does Corporate Social Responsibility Lead to Superior Financial Performance? A Regression Discontinuity Approach," Management Science, INFORMS, vol. 61(11), pages 2549-2568, November.
    11. Doron Levit & Nadya Malenko, 2011. "Nonbinding Voting for Shareholder Proposals," Journal of Finance, American Finance Association, vol. 66(5), pages 1579-1614, October.
    12. Tamas Barko & Martijn Cremers & Luc Renneboog, 2022. "Shareholder Engagement on Environmental, Social, and Governance Performance," Journal of Business Ethics, Springer, vol. 180(2), pages 777-812, October.
    13. Harrison Hong & Edward Shore, 2023. "Corporate Social Responsibility," Annual Review of Financial Economics, Annual Reviews, vol. 15(1), pages 327-350, November.
    14. Philipp Krueger & Zacharias Sautner & Laura T Starks, 2020. "The Importance of Climate Risks for Institutional Investors," The Review of Financial Studies, Society for Financial Studies, vol. 33(3), pages 1067-1111.
    15. Fama, Eugene F. & French, Kenneth R., 1993. "Common risk factors in the returns on stocks and bonds," Journal of Financial Economics, Elsevier, vol. 33(1), pages 3-56, February.
    16. McCrary, Justin, 2008. "Manipulation of the running variable in the regression discontinuity design: A density test," Journal of Econometrics, Elsevier, vol. 142(2), pages 698-714, February.
    17. Tomislav Ladika & Zacharias Sautner, 2020. "Managerial Short-Termism and Investment: Evidence from Accelerated Option Vesting," Review of Finance, European Finance Association, vol. 24(2), pages 305-344.
    18. Pástor, Ľuboš & Stambaugh, Robert F. & Taylor, Lucian A., 2021. "Sustainable investing in equilibrium," Journal of Financial Economics, Elsevier, vol. 142(2), pages 550-571.
    19. Cai, Jay & Garner, Jacqueline L. & Walkling, Ralph A., 2013. "A paper tiger? An empirical analysis of majority voting," Journal of Corporate Finance, Elsevier, vol. 21(C), pages 119-135.
    20. David Yermack, 2010. "Shareholder Voting and Corporate Governance," Annual Review of Financial Economics, Annual Reviews, vol. 2(1), pages 103-125, December.
    21. John G. Matsusaka & Oguzhan Ozbas & Irene Yi, 2021. "Can Shareholder Proposals Hurt Shareholders? Evidence from Securities and Exchange Commission No-Action-Letter Decisions," Journal of Law and Economics, University of Chicago Press, vol. 64(1), pages 107-152.
    22. Papke, Leslie E & Wooldridge, Jeffrey M, 1996. "Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 619-632, Nov.-Dec..
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Caroline Flammer & Michael W. Toffel & Kala Viswanathan, 2021. "Shareholder activism and firms' voluntary disclosure of climate change risks," Strategic Management Journal, Wiley Blackwell, vol. 42(10), pages 1850-1879, October.
    2. Maxime Couvert, 2025. "What Are the Firm Value Implications of SEC-Challenged Shareholder Proposals?," Management Science, INFORMS, vol. 71(6), pages 4728-4756, June.
    3. Cuñat, Vicente & Lü, Yiqing & Wu, Hong, 2025. "Managerial Response to Shareholder Empowerment: Evidence from Majority-Voting Legislation Changes," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 60(5), pages 2500-2525, August.
    4. Bardos, Katsiaryna Salavei & Mishra, Dev R. & Somé, Hyacinthe Y., 2025. "Firm-level climate sentiments, climate politics and implied cost of equity capital," Journal of Corporate Finance, Elsevier, vol. 94(C).
    5. Dasgupta, Amil & Fos, Vyacheslav & Sautner, Zacharias, 2021. "Institutional investors and corporate governance," LSE Research Online Documents on Economics 112114, London School of Economics and Political Science, LSE Library.
    6. Huij, Joop & Laurs, Dries & van Zanten, Jan Anton, 2025. "The investment implications of sustainable investing," Journal of International Money and Finance, Elsevier, vol. 159(C).
    7. Ho, Thang, 2022. "Climate change news sensitivity and mutual fund performance," International Review of Financial Analysis, Elsevier, vol. 83(C).
    8. Alona Bilokha & Mingying Cheng & Mengchuan Fu & Iftekhar Hasan, 2025. "Understanding CSR champions: a machine learning approach," Annals of Operations Research, Springer, vol. 347(1), pages 761-774, April.
    9. Christopher S. Armstrong & Ian D. Gow & David F. Larcker, 2013. "The Efficacy of Shareholder Voting: Evidence from Equity Compensation Plans," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 51(5), pages 909-950, December.
    10. Alves, Rómulo & Krüger, Philipp & van Dijk, Mathijs, 2025. "Drawing up the bill: Are ESG ratings related to stock returns around the world?," Journal of Corporate Finance, Elsevier, vol. 93(C).
    11. Alessi, Lucia & Ossola, Elisa & Panzica, Roberto, 2023. "When do investors go green? Evidence from a time-varying asset-pricing model," International Review of Financial Analysis, Elsevier, vol. 90(C).
    12. Liu, Yukun & Wu, Xi, 2023. "How does shareholder governance affect the cost of borrowing? Evidence from the passage of anti-takeover provisions," Journal of Accounting and Economics, Elsevier, vol. 75(2).
    13. Juan C. Reboredo & Luis A. Otero González, 2022. "Low carbon transition risk in mutual fund portfolios: Managerial involvement and performance effects," Business Strategy and the Environment, Wiley Blackwell, vol. 31(3), pages 950-968, March.
    14. Greg Tindall & Rebel A. Cole & David Javakhadze, 2025. "Innovation Responds to Climate Change Proposals," Journal of Business Ethics, Springer, vol. 198(3), pages 509-536, May.
    15. Rzeznik, Aleksandra & Weiss-Hanley, Kathleen, 2021. "The Salience of ESG Ratings for Stock Pricing: Evidence From (Potentially) Confused Investors," CEPR Discussion Papers 16334, Centre for Economic Policy Research.
    16. Pástor, Ľuboš & Stambaugh, Robert F. & Taylor, Lucian A., 2022. "Dissecting green returns," Journal of Financial Economics, Elsevier, vol. 146(2), pages 403-424.
    17. Yonca Ertimur & Fabrizio Ferri & David Oesch, 2015. "Does the director election system matter? Evidence from majority voting," Review of Accounting Studies, Springer, vol. 20(1), pages 1-41, March.
    18. Wei Zhang & Xinyu Li & Guanying Wang & Xiangqian Li, 2026. "Environmental pollution and IPO pricing efficiency: evidence from heavily polluting firms in China," Review of Quantitative Finance and Accounting, Springer, vol. 66(2), pages 757-798, February.
    19. Caroline Flammer, 2019. "Green Bonds: Effectiveness and Implications for Public Policy," NBER Working Papers 25950, National Bureau of Economic Research, Inc.
    20. Faccini, Renato & Matin, Rastin & Skiadopoulos, George, 2023. "Dissecting climate risks: Are they reflected in stock prices?," Journal of Banking & Finance, Elsevier, vol. 155(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:corfin:v:89:y:2024:i:c:s0929119924001159. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jcorpfin .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.