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Shareholder-initiated environmental and energy resolutions: too little too late?
Abstract
Purpose
Given the urgency to address the climate change crisis, the purpose of this study was to investigate the impact of 12 macro-level antecedents on energy and environmental (E&E) shareholder activism in 12 developed countries. Focus was placed on shareholder-initiated E&E resolutions.
Design/methodology/approach
Panel regressions were used to evaluate the relationships between the macro-level antecedents and two dependent variables, namely, the number of shareholder-initiated E&E resolutions filed and voting support for these resolutions.
Findings
The number of shareholder-initiated E&E resolutions filed increased slightly over the research period (2010–2019) but received very little voting support on average. Most of the 1,116 considered resolutions centred on the adoption or amendment of nuclear and environmental policies. Several resolutions called for improved E&E reporting. A significant relationship was found between the number of shareholder-initiated E&E resolutions filed and the rule of law.
Research limitations/implications
The empirical evidence confirmed limited voting support for shareholder-initiated E&E resolutions and the importance of the rule of law in advancing the E&E social movement.
Practical implications
As the E&E social movement is gaining momentum, listed companies in the considered countries are likely to experience more pressure from shareholder activists.
Social implications
To achieve participatory and inclusive climate governance, shareholder activists should collaborate more closely with other challengers in the E&E social movement, notably policy makers and those promoting the rule of law.
Originality/value
The authors considered macro-level antecedents of E&E shareholder activism that have received scant attention in earlier studies. Social movement theory was used as a novel theoretical lens.
This study aims to examine the impact of minority investor protection mechanisms on agency costs. All relevant indicators of minority investor protection adapted from the World Bank’s annual ‘Doing Business’ reports, along with concentrated government ownership, are employed with a panel data sample of 135 Vietnamese listed firms during the period 2014–2018. It is found that the following mechanisms are effective in mitigating agency costs and hence agency problems at the firm level: 1) review and approval requirements for related-party transactions; 2) minority shareholders’ ability to sue and hold directors liable for their duties; 3) minority shareholders’ access to internal corporate documents; 4) investors’ rights to approve major corporate investment and sale of asset decisions; and 5) disclosure in annual reports of salaries, bonuses and other forms of remuneration to directors and management. Interestingly, board independence and controlling government shareholders are not confirmed to play significant roles in addressing agency problems. To the best of the authors’ knowledge, this is the first attempt at testing for the impact of minority investor protection mechanisms developed by the World Bank on agency costs at the firm level, hence providing empirical evidence for the adoption of the minority investor protection mechanisms promoted by the World Bank. This study also provides policy implications for selecting effective mechanisms to mitigate agency conflicts between controlling shareholders and minority investors in order to enhance the financial performance of firms in an Asian emerging market.
This article analyses the recent significant increase in number, prominence and impact of shareholder resolutions focused on environmental, social and governance (‘ESG’) issues in Australia. The analysis is placed in the context of the legal framework for shareholder resolutions and uses two sources of data: information about shareholder ESG resolutions in listed companies between 2002 and 2019, and interviews with representatives of resolution proponents, institutional shareholders, company directors, governance professionals, and the Australian Securities and Investments Commission. It finds a significant increase in the last three years in ESG shareholder resolutions, particularly climate change resolutions, concentrated in a small number of filers, companies and industries. Against a background of modest average levels of support for shareholder ESG resolutions, examples of companies which have recorded high levels of support are notable. Shareholder ESG resolutions are generally recognised as a valuable corporate stakeholder engagement mechanism, producing positive change in some companies.
This study aims to examine the impact of globalization on environmental performance by employing panel data for 148 countries from 2001 to 2018, via the indicator of Environmental Performance Index to capture the overall environmental quality and KOF index to measure the multi dimensions of globalization. The empirical results suggest that globalization is critical to environmental performance, which is reliable while we conduct several robustness tests. Furthermore, if globalization increases, it would be beneficial for the environmental performance; moreover, among specific dimensions of globalization, economic globalization, social globalization and political globalization would bring about better environmental performance. Besides, the improvement of globalization, social globalization and political globalization would bring about better environmental performance, while that of economic globalization cannot change the overall environmental performance. Our study offers more insight into the relationship between globalization and environmental performance.
In this data article, we present datasets from the construction of a composite indicator, the Photovoltaic Decentralised Energy Investment (PV-DEI) index, presented in detail in [1]. This article consists of the comprehensive energy-related data collected in practice from several sources, and from the outputs of the methodology described in [1]. The PV-DEI index includes 52 indicators and was designed and developed to measure the multidimensional factors that currently direct decentralised renewable energy investments. The PV-DEI composite indicator was constructed because factors stimulating investment cannot be captured by a single indicator, e.g. competitiveness, affordability, governance [1]. The PV-DEI was built in alignment with a theoretical framework guided by an extensive review of the literature surrounding investment in decentralised Photovoltaic (PV), which led to the selection of its indicators. The structure of the PV-DEI was evaluated for its soundness using correlational assessments and principal component analyses (PCA). The raw data provided in this article can enable stakeholders to focus on specific country indicators, and how scores on these indicators contributed to a countries overall rank within the PV-DEI. The data can be used to weight indicators depending on the specifications of several different stakeholders (such as NGO, private sector or international institutions).
Research on the outcomes of shareholder activism has gained momentum among management scholars in recent years. However, studies focusing on the way shareholder activists affect top managers’ cognition are still in its infancy. Thus, this study examines the relationship between shareholder activism and chief executive officers’ (CEOs’) future focus on the basis of signaling theory. By applying a contingency view and considering various characteristics of proposals by activists as pivotal moderators, it intends to reveal the conditions under which activists stimulate CEOs’ future focus. Empirical analyses not only confirm that shareholder activism shapes CEOs’ future focus but also reveal that this effect is stronger when shareholder proposals are written in an analytical and powerful tone, contain more adverbs and verbs, and trigger CEOs’ cognition by highlighting negativity. Conversely, more self-related proposals reduce activists’ positive impact. Supplemental analyses indicate that the relationship between shareholder activism and CEOs’ future focus may vary under the different characteristics of the boards of directors. Generally, the study provides an innovative and more ‘humanized’ perspective on the literature being among the first to examine the impact of shareholder activism on CEOs’ future focus based on signaling theory. By exploring communication characteristics, the study also applies a relatively novel lens in management research. Moreover, it offers valuable practical implications for shareholders (proposals as effective means to increase interest alignment between shareholders and top-level executives), CEOs (proposals as an impetus to become more aware of future events), and boards of directors (proposals as an important governance tool).
The 2020 Environmental Performance Index (EPI) ranks 180 countries on 32 performance indicators in the following 11 issue categories: air quality, sanitation and drinking water, heavy metals, waste management, biodiversity and habitat, ecosystem services, fisheries, climate change, pollution emissions, agriculture, and water resources. These categories track performance and progress on two broad policy objectives, environmental health and ecosystem vitality. The EPI's proximity-to-target methodology facilitates cross-country comparisons among economic and regional peer groups. It is the result of collaboration of the Yale Center for Environmental Law and Policy (YCELP), Yale University and Columbia University Center for International Earth Science Information Network (CIESIN). The Interactive Website for the 2020 EPI is at https://epi.yale.edu/.
This paper reviews the relationship between employees’ perceived CSR and its dimensions and work outcomes, and explores the moderating effects of the samples’ demographic characteristics (i.e., gender, age), and national culture, based on a meta‐analysis of 65 studies from 67 samples. Results show that perceived CSR and its dimensions are positively related to employees’ positive attitudes and behaviours, and negatively related to their negative attitudes and behaviours. The results also partially support the moderating effects of the samples’ demographic characteristics in terms of age and gender, and national culture. This study supplements existing theoretical review articles, and further confirms the psychological effects of perceived CSR. In addition, the results further confirm the rationality of CSR practices and provide suggestions for enterprises to better use CSR strategies to motivate their employees.
Corporate sustainability is a dynamic, socially constructed concept. Relatedly, to understand the variations in the disclosure of corporate sustainability activities across countries, we need to inherently explore their underlying sociopolitical contexts. At present our understanding in this regard, is deficient. We respond to this extant research gap by adopting a multi‐country approach to investigate the relationship between countries' institutional environments and firms' sustainability disclosure (SD) practices, across six countries in the Southeast Asian region. Our findings reflect a common focus of Southeast Asian firms on community and human resources (HRs) related disclosures. Nevertheless, nuanced differences in their overall SD levels confirm the influence of differing legal, normative, and sociocultural systems in engendering greater disclosure and transparency at a national level. By quantifying the institutional environment and identifying external influencing factors, our study provides a useful framework grounded in neo‐institutional theory to widen the existing understanding of how institutional pressures can be measured and compared across different contexts.
The current study examines the effects of two major dimensions of Paternalistic Leadership, authoritarian and benevolent, on the perceived workplace ethical climate in different cultural contexts. Based on social influence and organizational justice theories, we illuminate the processes underlying the effects of these leadership styles on ethical climate by proposing perceived procedural and interactional justice as potential mediators. We test how these mediating effects vary in three different countries: Taiwan, Turkey, and the U.S. Based on a sample of 674 Taiwanese, 409 Turkish, and 479 American employees, we identified several interesting mediation and moderation results on leadership – justice – ethical climate paths. To our surprise, while procedural justice was an important mechanism linking benevolent leadership and ethical climate in all three countries, it mediated the relationship between authoritarian leadership and ethical climate only in Turkey. However, interactional justice was found to be a significant mediating mechanism only in the U.S. and for both authoritarian and benevolent leadership. In addition, cultural context moderated the paternalistic leadership-justice link such that the strongest positive benevolent leadership and interactional justice relationship, as well as the strongest negative association between authoritarian leadership and both types of justice, were observed in Turkey.
We extend the IPO literature analysing the role of financial market integration in the development of IPO markets and the pricing of newly listed stocks. Using a hierarchical linear model, we show that differences in underpricing between markets with high and low financial integration levels are economically significant and may explain the choice of location in the listing process. Firstly, market integration negatively affects the level of IPO underpricing by increasing the importance and efficiency of the financial intermediation process via tradable securities. Secondly, the presence of a deeper market integration has a moderation effect, which weakens the explanatory power of country institutions in the cross-country variation of IPO underpricing. Finally, we suggest a hierarchical structure be assumed for the modelling of cross-country IPO studies with heterogeneous country characteristics. Our results are robust to alternative measures of financial integration and several model specifications.
This paper critically examines the role of law in promoting economic development and argues that the most influential ‘law and development’ agenda—the World Bank Doing Business (DB) project—is not fit for purpose and should be replaced. The paper argues that the DB project and associated rankings embody a set of ideological and technical preferences whose relationship with economic development is at best uncertain. Context and cultural sensitivity are all important in the ‘real’ world and reducing complicated matters to a single ranking is not compatible with bringing about genuine improvements in the legal framework for doing business.
The paper deals with the analysis of methodology of Environmental Performance Index. The authors analyzed and systematized the main existing integrated indices, which were used for evaluation of environmental, social and economic situation in the countries. The authors allocated the environmental performance index as a basis for analyzing the environmental policy of the country. In this direction, the authors analysed the main features, structure and indicators of environmental performance index. The authors allocated the world-leader countries with huge level of CO2 emissions. According to the results, the authors aproved that these countries should improve their environmental policy. Accordingly, they occupied less position in environmental performance index. For the purpose to analyze the relation between ecological, social and economic welfare, the authors analyzed score of sustainable development goal index, social progress index and gross domestic product per capita. The comparison analysis of findings showed that countries with good position on environmental performance index have the strong position on sustainable development goal index and social progress index. The authors suggested that Ukraine should orient to the EU countries with purpose to improve the environmental policy.
Purpose
Sustainability reporting has been widely adopted by firms worldwide given the need of stakeholders for more transparency on environmental, social and governance (ESG) issues. The purpose of this paper is to investigate the relationship between ESG and bank’s operational (Return on Assets), financial (Return on Equity) and market performance (Tobin’s Q).
Design/methodology/approach
This study examined 235 banks for ten years (2007-2016) to ends up with 2,350 observations. The independent variable is the ESG disclosure; the dependent variables are performance indicators (return on assets, return on equity and Tobin’s Q). Two type of control variables are utilized in this study: bank specific and macroeconomic.
Findings
The findings deduced from the empirical results demonstrate that there is significant positive impact of ESG on the performance. However, the relationship between ESG disclosures is vary if measured individually; the environmental disclosure found positively affect the ROA and TQ. Whereas, the corporate social responsibility disclosure is negatively affect the three models. However, the corporate governance disclosure found negatively affects the ROA, ROE and positively affects the Tobin’s Q.
Originality/value
The results of this study can be used to present a successful model for worldwide banks to concentrate on the role of ESG disclosure in performance.
This systematic literature review analyses the determinants and consequences of executive compensation-related shareholder activism and say-on-pay (SOP) votes. The review covers 71 empirical articles published between January 1995 and September 2017. The studies are reviewed within an empirical research framework that separates the reasons for shareholder activism and SOP voting dissent as input factor on the one hand and the consequences of shareholder pressure as output factor on the other. This procedure identifies the five most important groups of factors in the literature: the level and structure of executive compensation, firm characteristics, corporate governance mechanisms, shareholder structure and stakeholders. Of these, executive compensation and firm characteristics are the most frequently examined. Further examination reveals that the key assumptions of neoclassical principal agent theory for both managers and shareholders are not always consistent with recent empirical evidence. First, behavioral aspects (such as the perception of fairness) influence compensation activism and SOP votes. Second, non-financial and sustainable interests significantly moderate shareholder activism. Insofar, we recommend integrating behavioral and non-financial aspects into the existing research. The implications are analyzed, and new directions for further research are discussed by proposing 19 different research questions.
In recent years, a new trend has emerged in which shareholder activists have formed networks to empower shareholders and magnify shareholder voices. This study explores the structural patterns and effectiveness of shareholder activism networks and shows how those networks affect corporate sustainability policies. We draw upon stakeholder influence theory, stakeholder network management theory and recent studies on activism networks to examine a shareholder activism network formed around environmental issues. The study found that (1) the structure of shareholder activist networks is largely driven by organizational attributes such as organization type, organizations’ human resources, media visibility and history; and (2) activist organizations with high centralities and eigenvector centralities enjoy more efficient results. This study contributes to our understanding of the business responses to shareholder demands on improving environmental performance and paves the way for future research on sustainable development through partnerships with shareholder networks. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment
In this paper, we analyse the effect of coercive isomorphism (legal system) on Corporate Social Responsibility (CSR) at the country level by using the multivariate statistical techniques X-STATIS and HJ-biplot, which allow us to capture the role that these institutional forces play in the evolution and patterns of behaviour regarding the commitment to sustainability. The results evidence that coercive forces have an important influence on the social and environmental commitment of companies. Analysis of the legal system shows that firms located in civil law countries have a greater interest in their CSR practices and in disclosing information than companies in common law countries; the most likely companies to act in a responsible way are those operating in institutional environments with a large and developed legal system oriented towards stakeholder protection. Consequently, our results show that companies operating in countries with similar legal systems adopt homogeneous patterns of behaviour regarding the commitment to sustainability, but their degrees of development are strongly determined by the coercive institutional characteristics.
Manuscript Type
Conceptual
Research Question/Issue
We research two questions: First, why do some institutional investors operate at a distance from organizations seemingly acting only to “exit” and “trade” shares, while others actively engage through various means of “voice”? Second, what processes and behaviour are associated with active ownership?
Research Findings/Insights
We develop the concept of active ownership by drawing on contrasting theories and images of ownership, identifying antecedents of active ownership and distinguishing between alternative processes of active ownership.
Theoretical/Academic Implications
Alternative pathways to active ownership contrast the distant, sometimes adversarial nature of shareholder activism with an engaged, collaborative relationship between investors and corporations. Few studies examine active ownership as a process of engagement and mutual exchange between parties taking a generally longer‐term perspective toward investment in the firm and its affairs. After modeling active ownership, we develop a research agenda of substantive issues ranging from market and institutional conditions, through investment organization and practice, to board and investor relations.
Practitioner/Policy Implications
Opening up the multidimensionality of engagement and relations between investors and corporations is crucial to promoting good corporate governance. Policymakers and practitioners require such knowledge when anticipating and developing adjustments to institutions of corporate governance.
Status and reputation have recently gained traction as theoretical mechanisms that, as important parts of decision processes, influence and explain firm behavior. In this study, we examine how environmentally concerned shareholder activists vary in their status and reputation, and how these differences affect firm responsiveness to their concerns. In a sample of 420 resolutions concerning the natural environment in the period 2004 to 2008, our results indicate that firms respond positively to shareholder activists’ high status (a desirable characteristic) and also to their reputation to threaten the firm (an unfavorable characteristic). As such, our study advances a promising explanation to firm responsiveness on environmental issues, rooted in their interpretation of how activists’ status and reputation affect their firm.
Singapore has been consistently ranked amongst the top for the ranking on the overall Ease of Doing Business index in the World Bank’s Doing Business report. The paper is the first academic paper evaluating the effects and impact of the Doing Business project on the business law reform in Singapore. It provides an in‐depth case study on how Singapore uses the Doing Business indicators in benchmarking its business law reform and the reasons for Singapore’s extraordinary performance in the Ease of Doing Business index. The study proves that the emphasis on efficiency in the Doing Business has positively influenced the policy making in Singapore. Nevertheless, the paper argues that while efficiency creates competitive edge for an economy, it shall not be the overriding principle in the policy making of a nation. Our core conclusion is that there are considerable limitations in the scope and contents of the indicators, especially the Protecting Investor index. We argue that the variables chosen in this indicator fail to capture features like investor protection and thus would not accurately reflect a jurisdiction’s quality of governance. Meanwhile, we contend that areas such as investor protection and corporate governance are too context‐specific to be evaluated based on a unified business assumption or by pure quantitative methods. We also provide specific suggestions for improvements of the Doing Business indicators.
Shareholder activism has become a dynamic institutional force, and its associated, rapidly increasing body of scholarly literature affects numerous disciplines within the organization science academy. In addition to equivocal results concerning the impact of shareholder activism on corporate outcomes, the separation of prior research into financial and social activism has left unanswered questions critical for both the scholarly discourse on shareholder activism and the normative debate on shareholder empowerment. The heterogeneity of factors in shareholder activism, such as the firm, activist, and environmental characteristics that promote or inhibit activism, along with the breadth of activism’s issues, methods, and processes, provide a plethora of theoretical and methodological opportunities and challenges for activism researchers. Our multidisciplinary review incorporates the financial and social activism streams and explores shareholder activism heterogeneity and controversy, seeking to provide an impetus for more cohesive conceptual and empirical work in the field.
Firms face a great deal of pressure to engage in the heightened debate about climate change policies and practices. Building on the corporate political strategy literature, the authors evaluate how firms choose to influence those policies when faced with pressure from shareholders and activists. The authors triangulate firms’ choice of corporate political activity (CPA) with their environmental performance to draw out whether performance affects the firm’s choice of engagement level in CPA. The authors find that firms in the S&P 500 use a form of constituency-building (CB) more often than a financial-incentive (FI) tactic and that environmental performance moderates this choice. To date, there is little research connecting corporate political activity and climate change policies and performance. This research is intended to contribute to this literature gap.
The importance and benefits of social trust have widely been recognized in the literature. However, there has been increasing concern about corruption in relation to a decline in social trust, and the role of business in this relationship remains largely unknown. This study aims to examine the linkages among corruption, corporate social responsibility (CSR), and social trust. Using a large sample of 6892 corporations from 33 countries over the period 2010–2014, the results demonstrate that corruption generates a highly eroding effect on social trust, whereas CSR has important implications for promoting trust among people in society. The results further suggest the potential role of CSR in mitigating the eroding effect of corruption on social trust. These results are robust across various methods of estimation, falsification tests, and in a different time period (2017–2020). This study makes several contributions to the literature both theoretically and empirically, and offers meaningful implications for businesses and policymakers.
This paper reports managers' perceived importance of various stakeholders’ pressure in their greenhouse gas (GHG) disclosure decisions. We also report on which stakeholders explain the variation in the extent of GHG disclosures. Further, evidence of how firm size moderates the relationship between some stakeholders and GHG disclosure is provided. Data were obtained through a mail survey of the UK's FTSE 100 listed firms, to which 62 firms responded. GHG disclosures within the respondents' annual reports were scored, and regression analysis was undertaken to determine if a relationship existed between actual GHG disclosures and the rating assigned to the stakeholders. The results indicate that the provider stakeholder group (shareholders, investors and community) is perceived to have the most significant influence on managers’ GHG disclosure decisions, followed by government regulators, organisational (employee, customers and suppliers) stakeholders, and social (competitors, NGOs and media) stakeholders, respectively. Regression results show a positive and significant relationship between perceived organisational and regulatory stakeholder pressure and actual GHG disclosures. However, the relationship between providers and social stakeholders and GHG disclosure is not significant. The findings further suggest that the relationships between organisational and regulatory pressure are moderated by firm size. The results have important implications for policymakers.
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Research Summary
This paper examines whether—in the absence of mandated disclosure requirements—shareholder activism can elicit greater disclosure of firms’ exposure to climate change risks. We find that environmental shareholder activism increases the voluntary disclosure of climate change risks, especially if initiated by institutional investors, and even more so if initiated by long-term institutional investors. We also find that companies that voluntarily disclose climate change risks following environmental shareholder activism achieve a higher valuation post disclosure, suggesting that investors value transparency with respect to firms’ exposure to climate change risks.
Managerial Summary
Climate change poses increasing risks to companies. Yet, despite the growing importance of climate change risks, little is known about companies’ exposure to climate change risks, their disclosure of these risks, and what strategic actions they take to manage and mitigate these risks. In this study, we examine whether—in the absence of mandatory disclosure— shareholders can elicit greater corporate transparency with respect to climate change risks. We find that shareholder activism is effective, especially if initiated by long-term institutional investors. We also find that the stock market reacts positively to companies’ climate risk disclosure following environmental shareholder activism, suggesting that investors value transparency with respect to firms’ exposure to climate change risks.
This research quantitatively investigates the bi-directional relationships between environmental protection expenditure and environmental performance by utilizing annual data for 34 countries during 2005–2017 and employing panel approaches like the cointegration test and VECM estimation. Our benchmark results support long-run bi-directional relationships between environmental protection expenditure and performance, but present no links between both variables in the short run. Pedroni's cointegration tests for sub-samples again confirm that both variables move together in the long run for all sample countries, but the panel VECM results support that while there are bi-directional relationships between variables among non-OECD countries, there are only unidirectional relationships from environmental performance to environmental expenditure in OECD countries. Our study offers important implications for policymakers that a better reallocation of environmental expenditure and long-term investment in environmental protection are critical for improving environmental performance.
This paper investigates the impact of corporate governance and culture background on firms' environmental performance and CSR disclosure from a global perspective. It also provides evidence of a positive relationship between performance and CSR disclosure, supporting the voluntary disclosure theory. We find that common internal corporate governance best practices (such as CEO non-duality, board with ESG committee and gender diversified board) are associated with better environmental performance and more disclosure of CSR related information. Debt is an effective internal governance vehicle and positively affects firms' environmental performance and CSR disclosure. Cross-listed firms perform better environmentally and disclose more CSR information. Firms residing in countries with stronger legal systems have less voluntary CSR disclosure, implying that external governance is functional and may partially serve as a substitute for internal governance. In terms of culture influence, we find that firms in countries with low power distance, individualism, femininity, high uncertainty avoidance, and long-term orientation perform better environmentally. Firms in low power distance, collectivistic, feminine, long-term oriented, high uncertainty avoidance and restrained countries disclose more CSR information. JEL codes: G34; M14; M41; Q56
In this paper, we conceptualize shareholder activism demanding CSR transparency as an outcome of the marketization of a social movement. We argue that the infusion of profit-oriented motivations into the social justice ideals on which the original shareholder activism movement was founded has contributed to create a conceptualization of CSR as a risk to be managed. As marketized solutions to risk management privilege the provision of information, they contribute to explaining the emphasis placed by shareholders on transparency in their proposals. Drawing on a sample of U.S. firms over 2006–2012, our evidence suggests a marked increase in CSR disclosure for the sample firms targeted by transparency proposals. However, our analysis reveals that concerns over the CSR practices of the same firms worsen, suggesting that shareholder activism demanding CSR transparency does not inspire change in corporate activities beyond disclosure, at least in the short term. Our contribution to the accounting literature lies in conceptualizing how the emphasis placed on CSR disclosure contributes to ensconcing the social movement into a corporation-centric, market-driven approach, moving away from the initial ideals of social justice aiming to push corporations to act on societal concerns. Altogether, we expose how the accounting practice of CSR disclosure is complicit in the attrition of the initial ideals of shareholder activism on CSR.
Organizations worldwide can play a significant role in the advancement of the Sustainable Development Agenda. However, there might be various factors influencing organizations’ decisions to address sustainability issues. This study aims to conduct an analysis of the country-level institutional factors related to the decision to address the Sustainable Development Goals in sustainability reports. The research is undertaken by considering 27 institutional factors belonging to six different national institutional systems, and it relies on data from 2413 sustainability reports published by organizations located in 90 different countries. The results show that organizations reporting on the Sustainable Development Goals are more likely to be located in countries with higher levels of climate change vulnerability, national corporate social responsibility, company spending on tertiary education, indulgence and individualism, and lower levels of market coordination, employment protection, power distance and long-term orientation. The study contributes to the literature on sustainable development and sustainability reporting by investigating the institutional factors related to addressing the Sustainable Development Goals in sustainability reports. The study can be useful for managers, investors and decision makers to develop country-specific strategies, investment plans, and policies to support organizations in contributing to the Sustainable Development Goals.
Research on socially responsible investing (SRI) and investor-led governance, especially in the climate sector, suggests that shareholders adopt social movement tactics to influence corporate governance, including building networks, engaging directly with corporations and lobbying regulators. Further, research on corporate transparency and financial disclosure has proliferated, notably in the extractives sector. Our work builds on these existing literatures, with a focus on shareholder resolutions on hydraulic fracturing (HF) in the United States. We analyze US HF-focused shareholder resolutions from 2010 to 2016 to evaluate filing strategies and outcomes. We argue that these resolutions provide space for a range of new actors to shape corporate governance—but their power is constrained. The constraints flow from the same political economy factors that enable shareholders to take collective action: the distance between individual investors and financial decisions; the structure of resolutions and managerial responses; and the complexity of investment vehicles and vote shares. We assess how shareholders respond strategically by altering the focus of resolution demands, liaising with external campaigns and networks, and engaging with government to enhance regulatory interventions. Our work reveals how the upstreaming of power in commodity chains intersects with the power of management boards and the challenges of financialization, with consequences for corporate and energy governance.
Shareholders have become increasingly active in endeavouring to influence companies’ environmental and social practices. In comparison with the mature field of financially motivated shareholder activism, limited enquiries have been carried out on its non-financial counterparts. This paper synthesizes the knowledge base through a review of the academic literature, exploring shareholder activism intended to affect corporate environmental and social performance. Theoretical perspectives appropriate to this phenomenon are critically appraised: in particular, insights from social movement theory, Hirschman's theory of exit, voice and loyalty and stakeholder salience theory, as well as the roles of signalling and symbolic management actions. Data from the literature are organized into a process model of non-financial shareholder influence. Underpinned by the influencing context, this conceptualization centres on three primary shareholder interventions: divestment, dialogue and shareholder proposals. These interventions are enabled through a range of actors and tools: coalitions, non-governmental organizations, codes and indices, the media and regulators. The interaction between interventions and the enabling actors and tools helps to determine managers’ perceptions of shareholder salience. These perceptions subsequently shape the organizational behaviours that affect companies’ symbolic and substantive environmental and social performance. An agenda to direct future research in this burgeoning field is articulated.
This study examined the determinants of voting decisions in shareholder meetings, with a special focus on voting persistence. The data captured votes on managerial proposals in shareholder meetings held by U.S. banks between 2003 and 2013. The dynamic panel data were analyzed using robust two-step system generalized method of moments estimation (GMM) with orthogonal deviations. The lagged voting decision was a significant factor in explaining subsequent voting decisions. This finding provides evidence of voting persistence. Although persistence is a prominent topic in behavioral economics, studies have tended to focus on buying, consumption, and investment decisions. Persistence in voting decisions at the corporate level has been underexplored, so this article contributes to the behavioral economics literature.
Owing to recent climate change concerns, the interaction between energy and environmental governance has received greater attention. Therefore, this study investigates the causal relationship between energy efficiency and environmental performance for 129 countries, using the panel cointegration and panel-based error correction models for the period 2002–2012. Our results corroborate that there exists a long-term equilibrium cointegrating relationship between energy efficiency and environmental performance, and that the panel fully modified ordinary least squares estimations present a positive relationship between variables. In accordance with the panel vector error correction model estimation, evidence confirms a bi-directional causal relationship among variables for the long term in the given sample of 129 countries. In addition, the sub-samples’ analyses present causalities running from energy efficiency to environmental performance in the long run, no matter for Organisation for Economic Co-operation and Development (OECD) or non-OECD countries, but a short-run relationship is seen only in OECD members. Evidence also shows an absence of causal direction from environmental performance to energy efficiency in both groups of countries. The policy implication is that an improvement in environmental quality should be based on promoting energy efficiency. However, given that energy efficiency still has not achieved improvement under strong environmental performance, this is a big challenge that cannot be avoided for both developing and developed countries. We also offer several constructive suggestions for how to promote energy efficiency.
Largely due to its conservative profile at the time, the U.S. labour movement was largely absent from modern social movement literature as it developed in response to the new social movements of the 1960s and 1970s. Recent labour mobilizations such as the Wisconsin uprising and the Chicago Teachers’ strike have been part of the current international cycle of protest that includes the Arab Spring, the antiausterity movements in Greece and Spain, and Occupy Wall Street. These struggles suggest that a new labour movement is emerging that shares many common features with new social movements. This article offers a general analysis of these and other contemporary labour struggles in light of contemporary modern social movement literature. It also critically reviews assumptions about the labour movement of the 1960s and 1970s and reexamines several social movement concepts.
Measures of governance and stateness have grown substantially in number over the recent decade and gained greater importance in building public discourses and orienting decision-making. Yet there seems to be little agreement on what exactly these measures represent. This paper claims that the proliferation of metrics can only be understood against the conceptual hybridity and indeterminacy in which the notions of governance and stateness have in recent decades become increasingly entangled. In sum, the nébuleuse of governance metrics reflects the nébuleuse of governing actors and structures informing this process. To frame this “creative disorder”, the first part of the chapter introduces the current debate on measuring governance and stateness. It then explores the semantic fields of the two concepts, while the third one provides an overview on existing measures and methodological questions. The fourth part explores normative demands and policy prescriptions linked to this production. The fifth section analyses in depth three different measures: The Rule of Law Index (RoLI), the Sustainable Governance Indicators (SGIs), and the State Fragility Index (SFI). The sixth part concludes by summarising the relevance of exploring both conceptual and normative challenges in production of these measures.
The issue of climate change poses something of a puzzle. For all the attention accorded the issue, climate change/global warming has spawned surprisingly little grassroots activism in the contemporary United States. Drawing on social movement theory, the author seeks to explain this puzzle. The prevailing consensus among movement scholars is that the prospect for movement emergence is facilitated by the confluence of three factors: the expansion of political opportunities, the availability of mobilizing structures, and cognitive and affective mobilization through framing processes. The author then applies each of these factors to the case of climate change, arguing that (a) awareness of the issue developed during an especially inopportune period in American politics, (b) the organizations that arose to address the issue were ill suited to the kind of grassroots mobilization characteristic of successful movements, and (c) the amorphous nature of the issue played havoc with efforts at strategic framing.
Purpose
The purpose of this paper is to examine social issue proxy filings by shareholders of U.S. corporations in a period commonly referred to as the “shareholder spring” in order to understand who the filers are, what issues are typically the focus of the filings, what the dominant strategy is of various filers, and the success rate of proxy-based shareholder social activism.
Design/methodology/approach
Using the shareholder filed proxy as the unit of analysis, the study parsed the data from 410 proxies to gain insight into the process of shareholder social activism.
Findings
Religious groups, in contrast to large pension and mutual funds, use a small shareholding approach to form coalitions with other stakeholders to gain voting support. Proxies that call for disclosure elicit greater support than those that demand a change in a company’s business practices. If the goal of shareholder social activism is to keep the proxy issue alive from one shareholder meeting to the next, then non-individual proxy filers can be considered successful.
Research limitations/implications
While the study only considered proxies for 250 of the Fortune 500 companies, there is evidence that social activism can succeed if a coalition strategy is utilized and the shareholder’s motives appear to be legitimately altruistic.
Practical implications
It is important for corporate managers to consider the prevailing shareholder sentiment on social issues because such sentiments largely echo general societal concerns.
Originality/value
Propelled by the Dodd-Frank law and the shareholder spring movement, certain types of shareholders (primarily religious groups) are quite adept at eliciting support for social issues because of both their legitimacy and by the strategy that they follow.
We summarize and synthesize the results from 67 studies that examine the consequences of shareholder activism for targeted firms, and draw two primary conclusions. First, activism that adopts some characteristics of corporate takeovers, especially significant stockholdings, is associated with improvements in share values and firm operations. Activism that is not associated with the formation of ownership blocks is associated with insignificant or very small changes in target firm value. Second, shareholder activism has become more value increasing over time. Research based on shareholder activism from the 1980s and 1990s generally finds few consequential effects, while activism in more recent years is more frequently associated with increased share values and operating performance. These results are consistent with Alchian and Demsetz (1972) argument that managerial agency problems are controlled in part by dynamic changes in ownership, and with Alchian’s (1950) observation that business practices adapt over time to mimic successful strategies.
The present article examines the recent advances reported in the literature regarding the mechanisms underlying the “resource curse” in developing countries. By analyzing the Rule of Law Index, we investigated how the institutions responsible for allocating hydrocarbon royalties can help minimize the effects of the resource curse. We used a qualitative methodology based on case studies. The results show that evidence of legal violations on the part of these institutions and the lack of tools in resource-rich developing countries to uphold basic social and economic rights are associated with the resource curse. Our findings suggest that strengthening the institutions, closer monitoring of oil revenue allocations, and public participation can help to alleviate the resource curse.
Manuscript Type: Empirical Research
Question/Issue: We study more than 12,000 shareholder proposals that were filed to S&P1500 companies from 1997 to 2009, and investigate the determinants of proposal withdrawal by the sponsoring shareholder. We also study the effectiveness of withdrawn proposals as a corporate governance device.
Research Findings/Insights: We find that proposals filed by influential investors are more likely to be withdrawn than proposals filed by private investors. Our empirical results show that institutional ownership (in particular by long-term, passively investing institutions) is positively related to a proposal's withdrawal likelihood if the sponsoring shareholder is an institutional investor. We also document a negative relation between CEO ownership and the withdrawal likelihood. This effect is most pronounced for corporate governance proposals. We also show that withdrawn proposals on executive compensation change subsequent corporate pay practices.
Theoretical/Academic Implications: Our paper provides the first comprehensive evidence on withdrawn shareholder proposals. We show that withdrawn proposals are a strong and important category of proposals because managers proactively prevent them from being put to a vote. Hence, our results imply that researchers should also account for withdrawn shareholder proposals when making inferences about the effectiveness of proxy proposals.
Practitioner/Policy Implications: Our empirical evidence points to the importance of withdrawn shareholder proposals as a governance mechanism. Managers try to protect their own power and reputation by preventing filed shareholder proposals from being put to a vote during the annual general meeting: They enter into private negotiations with the sponsors of the proposals to accomplish a withdrawal.
The Fukushima nuclear accident on March 11, 2011 in Japan has severely dented the prospects of growth of civilian nuclear power in many countries. Although Japan's worst nuclear accident was triggered by an unprecedented earthquake and tsunami, inadequate safety countermeasures and collusive ties between the plant operators, regulators, and government officials left the Fukushima Daiichi nuclear plant beyond redemption. A critical examination of the accident reveals that the accumulation of various technical and institutional lapses only compounded the nuclear disaster. Besides technical fixes such as enhanced engineering safety features and better siting choices, the critical ingredient for safe operation of nuclear reactors lie in the quality of human training and transparency of the nuclear regulatory process that keeps public interest—not utility interest—at the forefront. The need for a credible and transparent analysis of the social benefits and risks of nuclear power is emphasized in the context of energy portfolio choice.
Purpose
The purpose of this paper is to examine the propensity of sovereign wealth funds (SWFs) for shareholder activism and their potential impact on corporate governance.
Design/methodology/approach
The study highlights the relationships between SWFs and corporate governance and also applies eight antecedents/determinants of institutional activism to analyze whether SWFs have a predisposition for shareholder activism.
Findings
The study only finds two instances of SWF activism. Additionally, it finds that despite their mostly passive investments, SWFs possess a natural tendency toward shareholder activism. Some are more likely to engage in activism than others, however. SWFs with a higher proportion of their assets invested in equities, those with portfolios fully or partially constructed to emulate the broader financial markets through indexing, and those that depend less on external fund managers are the likeliest candidates for activism. The study also finds that the regulatory environment can curb the natural SWF inclination for activist behavior.
Research limitations/implications
Due to the lack of transparency within the SWF universe, this study largely depends on the limited data available for sovereign wealth funds.
Practical implications
Given the growing importance of SWFs, managers, directors, and policymakers must assess SWF activism, its influence on corporate governance, and its implications for public policy deliberations.
Originality/value
This project, to the best of the author's knowledge, is the first study that applies tested financial models to SWFs in order to determine if they have inherent activist tendencies.