The Shared Costs of Pursuing Shareholder Values

Michele Fioretti, Victor Saint-Jean and Simon Smith

No 21349, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study how shareholder values shape firms’ costly prosocial actions and who bears their costs. We develop a model in which some shareholders are publicly associated with a firm (e.g., founders or other prominent individual blockholders). When the firm takes a visible action under intense media scrutiny, these shareholders can plausibly claim credit and gain reputation, while diversified institutional investors cannot. The key empirical challenge is that influence is rarely observed: many consequential decisions are not subject to shareholder proposals or votes. We therefore use predetermined annual general meeting (AGM) timing combined with large, sudden crises - COVID-19 and the invasion of Ukraine - to generate quasi-experimental variation in attention and attribution, and to study highly visible, high-cost actions that were not legally required at onset. Firms with prominent individual blockholders are more likely to donate or exit when their AGM falls at crisis onset, while firms with large diversified institutional owners are less likely to do so. Consistent with our mechanism, online searches rise for prominent individuals after firm actions but not for institutions. Using an intent-to-treat triple-difference design on the 1,000 largest U.S.-listed firms, we find that exposed firms reduce investment, productivity, and profitability by 1-3% for up to two years, highlighting the shared costs of pursuing the values of a visible minority.

Keywords: shareholder values; Reputation; Exit or Voice; Corporate social responsibility; Covid-19; Russia-ukraine war; Control vs influence (search for similar items in EconPapers)
JEL-codes: G32 G41 M14 (search for similar items in EconPapers)
Date: 2026-04
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP21349 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:21349

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP21349

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().