Public Sentiment Decomposition and Shareholder Actions

Reena Aggarwal, Hoa Briscoe-Tran, Isil Erel and Laura T. Starks
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Reena Aggarwal: Georgetown U and ECGI
Hoa Briscoe-Tran: U of Alberta
Isil Erel: Ohio State U and ECGI
Laura T. Starks: U of Texas at Austin and ECGI

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: Employing a novel approach with unique data on public sentiment and a new metric on shareholder concerns, we establish an association between shareholder actions and public sentiment about a firm. The number of shareholder proposals effectively captures investor dissatisfaction, particularly since it includes firms with no shareholder proposals. We find that negative public sentiment about financial, governance, environmental or social issues is associated with more shareholder proposals, and we establish causality through a creative instrumental variable approach. Further, shareholder actions have real consequences as a larger number of shareholder proposals appears to result in higher turnover for CEOs and directors.

JEL-codes: G32 G34 G38 (search for similar items in EconPapers)
Date: 2024-12
New Economics Papers: this item is included in nep-cfn
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:ohidic:2024-26

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