Let's talk: an analysis of the 'vote vs. negotiated withdrawal' decision for social activist environmental health shareholder resolutions

摘要

Social and environmental shareholder activists engage in a form of corporate social governance by submitting proxy resolutions for a specific change in corporate behavior deemed to be harmful to society. Using a unique data-set for environmental health shareholder resolutions filed by shareholder activists at 70 different companies during 2006-2011, we examine the success rate of resolutions and characteristics affecting the "vote vs. negotiated withdrawal" decision. Supporting a self-interest hypothesis, resolutions targeting specific consumer/retail companies, with regard to chemicals in products or product safety issues, are more likely to be negotiated and withdrawn, while firms with entrenchment-related governance characteristics are more likely to be voted on. Examining wealth effects, consumer/retail companies with a resolution vote experience a -0.38% stock price reaction surrounding the annual meeting date, resulting in a significant economic average loss of -$453.5 million.