Determinants and Impact of Private Politics: An Empirical Analysis
This paper studies the links between private politics, environmental performance of firms and regulatory activity by the government. Following the terminology coined by Baron (2001), "private politics" refers to the individual or collective actions initiated by public interest and activist groups to further their objectives without relying on the law or regulation. In this paper, we focus on the determinants and effects of two such private political actions, boycotts and proxy contests. We have unique data on boycotts for the time period 1988-95 and on proxy votes for the time period 1988-2000. We find that the size of a firm is an important predictor of the fact if a firm will be chosen as a target of an activist campaign. We find MIXED support for Baron's (2006) theory that activist campaigns will focus on "soft targets" (progressive firms). Our preliminary findings show that private politics does spur the firms to adopt voluntary environmental systems. Specifically, we find that the boycotts increase the probability of adoption of an environmental management system by 27-33 percent.
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- Teoh, Siew Hong & Welch, Ivo & Wazzan, C Paul, 1999.
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- Ivo Welch & Siew Hong Teoh & Paul Wazzan, 1995. "The Effect of Socially Activist Investment Policies on the Financial Markets: Evidence from the South African Boycott," Finance _005, University of California at Los Angeles.
- Siew Hong Teoh & Christopher Paul Wazzan & Ivo Welch, 1996. "The Effect Of Socially Activist Investment Policies On The Financial Markets: Evidence From The South African Boycott," Yale School of Management Working Papers ysm70, Yale School of Management.
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"Incentives for environmental self-regulation and implications for environmental performance,"
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- Maxwell, John W & Lyon, Thomas P & Hackett, Steven C, 2000.
"Self-Regulation and Social Welfare: The Political Economy of Corporate Environmentalism,"
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University of Chicago Press, vol. 43(2), pages 583-617, October.
- John W. Maxwell & Thomas P Lyon & Steven C.. Hackett, 1995. "Self-Regulation and Social Welfare: The Political Economy of Corporate Environmentalism," University of Chicago - George G. Stigler Center for Study of Economy and State 122, Chicago - Center for Study of Economy and State.
- David P. Baron, 2003. "Private Politics," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(1), pages 31-66, 03.
- Baron, David P., 2006. "A Positive Theory of Moral Management, Social Pressure, and Corporate Social Performance," Research Papers 1940, Stanford University, Graduate School of Business.
- Robert Innes, 2006. "A Theory of Consumer Boycotts under Symmetric Information and Imperfect Competition," Economic Journal, Royal Economic Society, vol. 116(511), pages 355-381, 04.
- David P. Baron, 2001. "Private Politics, Corporate Social Responsibility, and Integrated Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 7-45, 03.
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