ESG shareholder engagement and downside risk

Hoepner, A. G. F., Oikonomou, I., Sautner, Z., Starks, L. T. and Zhou, X. Y. (2024) ESG shareholder engagement and downside risk. Review of Finance, 28 (2). pp. 483-510. ISSN 1573-692X doi: 10.1093/rof/rfad034

Abstract/Summary

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.

Item Type	Article
URI	https://reading-clone.eprints-hosting.org/id/eprint/113624
Item Type	Article
Refereed	Yes
Divisions	Henley Business School > Finance and Accounting
Uncontrolled Keywords	Finance, Economics and Econometrics, Accounting
Publisher	Oxford University Press (OUP)
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