Shareholder activism and firms' voluntary disclosure of climate change risks

摘要

Research Summary This article examines whether-in the absence of mandated disclosure requirements-shareholder activism can elicit greater disclosure of firms' exposure to climate change risks. We find that environmental shareholder activism increases the voluntary disclosure of climate change risks, especially if initiated by institutional investors, and even more so if initiated by long-term institutional investors. We also find that companies that voluntarily disclose climate change risks following environmental shareholder activism achieve a higher valuation postdisclosure, suggesting that investors value transparency with respect to firms' exposure to climate change risks.Managerial Summary Climate change poses increasing risks to companies. Yet, despite the growing importance of climate change risks, little is known about companies' exposure to climate change risks, their disclosure of these risks, and what strategic actions they take to manage and mitigate these risks. In this study, we examine whether-in the absence of mandatory disclosure-shareholders can elicit greater corporate transparency with respect to climate change risks. We find that shareholder activism is effective, especially if initiated by long-term institutional investors. We also find that the stock market reacts positively to companies' climate risk disclosure following environmental shareholder activism, suggesting that investors value transparency with respect to firms' exposure to climate change risks.