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    Shareholder Activism and Firms’ Voluntary Disclosure of Climate Change Risks
    13 Nov 2019Working Paper Summaries

    Shareholder Activism and Firms’ Voluntary Disclosure of Climate Change Risks

    by Caroline Flammer, Michael W. Toffel, and Kala Viswanathan
    Shareholder resolutions typically fail, and often by a wide margin. So why do active investors bother? It turns out that resolutions nonetheless can influence corporate transparency. Specifically, after being targeted with shareholder resolutions on environmental topics, this research shows that companies are more likely to publicly disclose their climate change risks—and that such disclosure increases these companies’ valuation.
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    Author Abstract

    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 investors who are more powerful (institutional investors) or whose request has more legitimacy (long-term institutional investors). We also find that companies that voluntarily disclose climate change risks following environmental shareholder activism achieve a higher valuation, suggesting that investors value transparency with respect to climate change risks.

    Paper Information

    • Full Working Paper Text
    • Working Paper Publication Date: October 2017
    • HBS Working Paper Number:
    • Faculty Unit(s): Technology and Operations Management
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    Michael W. Toffel
    Michael W. Toffel
    Senator John Heinz Professor of Environmental Management
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    Kala Valli Viswanathan
    Kala Valli Viswanathan
    Doctoral Student in Technology and Operations Management
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    Find Related Articles
    • Business and Shareholder Relations
    • Investment Activism
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