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One proxy at a time : pursuing social change through shareholder proposals


  • Paula A. Tkac


Traditional economic wisdom holds that a corporation’s sole goal should be to maximize shareholder wealth. But some investors believe that firms should also act as agents for social change. Activist investors use their shareholder rights to place socially responsible resolutions on corporate proxy statements to be voted on by all shareholders. ; This article examines the controversy behind corporate social responsibility (CSR) and identifies and categorizes activist investors, their objectives, and the firms they target. Using data from the Investor Responsibility Research Center (IRRC) on 2,829 CSR shareholder proposals from 1992 to 2002, the author finds that religious organizations and individuals made the largest number of proposals, but in 2000 proposals by socially responsible mutual funds began to outnumber those by individuals. The three most common proposal topics were international conduct, environmental issues, and antidiscrimination. ; Of the 566 different corporations targeted, seventy-three were targeted ten times or more. Larger, economically powerful firms—especially those that value consumer goodwill and have the “name” to aid in social change—were most often targeted. ; Because a withdrawn resolution usually signals an action by the corporation—dialogue, agreement to resolution, or some other compromise—the author argues that withdrawn proposals can be used as measure of activism’s success. The IRRC data and her own extensive research on the outcome of withdrawn proposals support this argument.

Suggested Citation

  • Paula A. Tkac, 2006. "One proxy at a time : pursuing social change through shareholder proposals," Economic Review, Federal Reserve Bank of Atlanta, issue Q 3, pages 1-20.
  • Handle: RePEc:fip:fedaer:y:2006:i:q3:p:1-20:n:v.91no.3

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    References listed on IDEAS

    1. Willard T. Carleton & James M. Nelson & Michael S. Weisbach, 1998. "The Influence of Institutions on Corporate Governance through Private Negotiations: Evidence from TIAA-CREF," Journal of Finance, American Finance Association, vol. 53(4), pages 1335-1362, August.
    2. Roberta Romano, 2001. "Less is More: Making Shareholder Activism a Valuable Mechanism of Corporate Governance," CeRP Working Papers 12, Center for Research on Pensions and Welfare Policies, Turin (Italy).
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    Cited by:

    1. Emma Sjöström, 2008. "Shareholder activism for corporate social responsibility: what do we know?," Sustainable Development, John Wiley & Sons, Ltd., vol. 16(3), pages 141-154.
    2. Emma Sjöström, 2010. "Shareholders as Norm Entrepreneurs for Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 94(2), pages 177-191, June.
    3. Vanessa Serret & Sylvie Berthelot, 2013. "Activisme Actionnarial Et Responsabilite Sociale Des Entreprises Au Canada : Analyse Des Resolutions Soumises Par Les Actionnaires Entre 2000 Et 2011," Post-Print hal-01002373, HAL.
    4. Stuart L. Gillan & Laura T. Starks, 2007. "The Evolution of Shareholder Activism in the United States," Journal of Applied Corporate Finance, Morgan Stanley, vol. 19(1), pages 55-73.

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