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    • COVID-19 Business Impact Center
      COVID-19 Business Impact Center
      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
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      • 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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