Socially Responsible Shareholder Engagement

The Influence Of Geographically and Politically Diverse Ownership On Support For SRI Proposals Of US Firms

Bachelor Thesis , 2016 , 21 Pages , Grade: 8.5

Business economics - General

There is a growing attention for the corporate social responsibility and socially responsible investing (SRI) of organisations, and shareholders are increasingly voicing their concerns. This research examined whether the different characteristics of these shareholders have an impact on the support for shareholder proposals that are related to SRI. The effects of European ownership and political views on SRI proposal success of US firms were researched. It was hypothesised that Europeans have a positive effect on proposal success since there is more progression with respect to CSR in Europe, compared to the US. No evidence could be found in support of this hypothesis; the results show that European ownership has no significant effect on proposal success. It was also hypothesised that Democratic shareholders increase the chances of proposal success when compared to Republicans. The results show that a 1% increase in the share of Democratic shareholders increases the amount of positive votes on SRI proposals with 0.25%. The same increase in the share of Republican shareholders increases these positive votes by 0.23%. The hypothesis can thus be accepted, although the impact is very small. Several limitations were discussed which could be addressed in future research; with an improved regression model the research question could be researched in a more secure manner.

Inhaltsverzeichnis (Table of Contents)

• Executive Summary
• 1. Introduction
• 2. Literature Review
  • 2.1. Shareholder proposals
  • 2.2. Nationality differences
  • 2.3. Political differences
  • 2.4. Hypotheses
• 3. Methodology
• 4. Results
  • 4.1. Descriptive statistics
  • 4.2. Control variables
  • 4.3. Nationality differences
  • 4.4. Political differences
• 5. Discussion
  • 5.1. Summary of results
  • 5.2. Withdrawn proposals
• 6. Limitations And Recommendations For Future Research
  • 6.1. Limitations
  • 6.2. Recommendations for future research
• 7. Conclusion

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This research aims to explore the influence of geographically and politically diverse ownership on the success of shareholder proposals related to socially responsible investing (SRI) in US firms. The study examines the impact of European ownership and political views (Democrats vs. Republicans) on the voting outcomes of such proposals.

• The impact of European ownership on SRI proposal success in US firms
• The influence of political ideology (Democrats vs. Republicans) on shareholder voting behavior regarding SRI proposals
• The role of shareholder activism in promoting corporate social responsibility (CSR) and SRI
• The significance of shareholder diversity in shaping the success of sustainability-focused proposals
• The limitations and potential avenues for future research in this area

Zusammenfassung der Kapitel (Chapter Summaries)

• Executive Summary: The research investigates the influence of shareholder characteristics on the success of SRI proposals in US firms, focusing on European ownership and political views. The results suggest that European ownership does not significantly affect proposal success, while a 1% increase in Democratic shareholders increases positive votes by 0.25% compared to a 0.23% increase for Republicans.
• 1. Introduction: The paper introduces the growing importance of sustainability and CSR in corporate practices and the role of shareholder activism in influencing these practices. It highlights the diversity of shareholder bases and the potential impact of nationality and political ideology on voting outcomes.
• 2. Literature Review: This chapter reviews existing research on shareholder engagement, CSR, and SRI. It discusses the evolution of shareholder engagement over time and the impact of successful engagements on firm performance. It also explores the mechanisms of shareholder proposals, including their submission, withdrawal, omission, and voting processes.
• 2.1. Shareholder proposals: This section delves into the process of shareholder proposals, including their historical context, legal framework, and various possible outcomes. It emphasizes the rights of shareholders in relation to proposal submission, circulation, voting, and presentation at annual general meetings.
• 2.2. Nationality differences: This section explores the potential impact of nationality on shareholder voting behavior, particularly focusing on the difference in CSR progression between Europe and the US. It hypothesizes that European investors might influence the outcome of sustainability-related proposals in US firms due to a more progressive CSR approach in Europe.
• 2.3. Political differences: This section investigates the potential influence of political ideology within the US, specifically the difference between Democrats and Republicans. It examines the varying perspectives on CSR and individual rights between these political groups and explores the potential for differing voting patterns based on these ideological positions.
• 2.4. Hypotheses: This section presents the hypotheses derived from the literature review: European ownership is expected to positively influence SRI proposal success in US firms, and Democratic shareholders are expected to increase the chances of proposal success compared to Republican shareholders.
• 3. Methodology: This chapter outlines the research methodology employed to investigate the research questions and hypotheses. It details the data collection and analysis techniques used to examine the influence of ownership characteristics on SRI proposal success.
• 4. Results: This chapter presents the findings of the research, including descriptive statistics, control variable analysis, and the analysis of nationality and political differences. The results highlight the influence of political ideology, with Democratic shareholders having a slightly higher impact on positive votes compared to Republicans.
• 4.1. Descriptive statistics: This section presents basic descriptive statistics of the data used in the research, providing insights into the characteristics of the sample and the distribution of key variables.
• 4.2. Control variables: This section discusses the control variables used in the analysis to isolate the effects of European ownership and political ideology on proposal success. It explains how these control variables are used to account for potential confounding factors.
• 4.3. Nationality differences: This section presents the results of the analysis examining the influence of European ownership on SRI proposal success. It discusses the findings and their implications for the research hypotheses.
• 4.4. Political differences: This section presents the results of the analysis examining the influence of political ideology (Democrats vs. Republicans) on voting outcomes. It discusses the findings and their implications for the research hypotheses.
• 5. Discussion: This chapter discusses the implications of the research findings and provides insights into the relationships between ownership characteristics, SRI proposals, and voting outcomes.
• 5.1. Summary of results: This section summarizes the key findings of the research, highlighting the impact of political ideology and the lack of significant impact from European ownership on proposal success.
• 5.2. Withdrawn proposals: This section explores the concept of withdrawn proposals, analyzing how they might be interpreted as a success for shareholders, demonstrating the potential for influence and negotiation between shareholders and management.
• 6. Limitations And Recommendations For Future Research: This chapter discusses the limitations of the research and provides recommendations for future research to address these limitations and enhance the understanding of the topic.
• 6.1. Limitations: This section identifies and discusses the potential limitations of the research, such as the specific sample size, the regression model used, and the potential for other factors influencing proposal success.
• 6.2. Recommendations for future research: This section provides recommendations for future research, suggesting directions for further investigation to refine the research question, improve the analytical model, and broaden the scope of analysis.

Schlüsselwörter (Keywords)

The study focuses on socially responsible shareholder engagement and its impact on the success of socially responsible investing (SRI) proposals in US firms. Key topics include shareholder activism, corporate social responsibility (CSR), sustainability, ownership diversity, nationality differences, political ideology, and voting behavior.

• College: Maastricht University
• Grade: 8.5
• Author: Colin Tissen (Author)
• Publication Year: 2016
• Pages: 21
• Catalog Number: V376330
• ISBN (eBook): 9783668536678
• ISBN (Book): 9783668536685
• Language: English
• Tags: sustainable investing, SRI, engagements, activism, sustainability, esg