ESG Shareholder Engagement and Downside Risk

Andreas G. F. Hoepner, Ioannis Oikonomou, Zacharias Sautner, Laura T. Starks and Xiaoyan Zhou
Additional contact information
Andreas G. F. Hoepner: University College Dublin
Zacharias Sautner: University of Zurich; Swiss Finance Institute; ECGI
Laura T. Starks: University of Texas at Austin
Xiaoyan Zhou: University of Oxford

No 23-77, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We show that engagement on environmental, social, and governance issues can benefit shareholders by reducing firms’ downside risks. We find that the risk reductions (measured using value at risk and lower partial moments) vary across engagement types and success rates. Engagement is most effective in lowering downside risk when addressing environmental topics (primarily climate change). Further, targets with large downside risk reductions exhibit a decrease in environmental incidents after the engagement. We estimate that the value at risk of engagement targets decreases by 9% of the standard deviation after successful engagements, relative to control firms.

Keywords: ESG; Shareholder Activism; Downside Risk; Corporate Governance; Climate Change (search for similar items in EconPapers)
JEL-codes: G32 M14 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2023-09
New Economics Papers: this item is included in nep-ene, nep-env and nep-rmg
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: ESG shareholder engagement and downside risk (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2377

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