Dimson, Karakaş, and Li (2015)
Dimson, Elroy, Oğuzhan Karakaş, and Xi Li. “Active Ownership.” Review of Financial Studies, forthcoming (dated June 9, 2015 on SSRN).
We analyze an extensive proprietary database of corporate social responsibility engagements with US public companies over 1999-2009. Engagements address environmental, social, and governance concerns. Successful (unsuccessful) engagements are followed by positive (zero) abnormal returns. Companies with inferior governance and socially conscious institutional investors are more likely to be engaged. Success in engagements is more probable if the engaged firm has reputational concerns and higher capacity to implement changes. Collaboration among activists is instrumental in increasing the success rate of environmental/social engagements. After successful engagements, particularly on environmental/social issues, companies experience improved accounting performance and governance, and increased institutional ownership.
LK comment: Strong paper. An earlier draft won the 2012 Moskowitz Prize.
Link (2015 working paper): http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2154724
Link (publication): https://academic.oup.com/rfs/article/28/12/3225/1573572