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A Vote for Sustainable Development: Investigating ESG Shareholder Engagement in U.S. Capital Markets

Hunter Jivung, Björn Thomas LU (2025) EKHS34 20242
Department of Economic History
Abstract (Swedish)
This study examines the causal effect of passing close-call ESG shareholder proposals on daily abnormal stock returns (DAR) using a novel dataset of U.S. shareholder proposal data from 2010-2024. Employing regression discontinuity design (RDD), it extends prior methodologies by Cuñat et al. (2012) and Flammer (2015) to assess whether shareholder engagement is an effective mechanism for aligning management’s short term profit maximizing incentives with shareholder advocated sustainability initiatives. Preliminary findings suggest that passing close-call ESG proposals is associated with a 0.5% increase in daily abnormal returns (DAR), statistically significant at the 10% level, considering only proposals that pass or fail by up to 5% of the... (More)
This study examines the causal effect of passing close-call ESG shareholder proposals on daily abnormal stock returns (DAR) using a novel dataset of U.S. shareholder proposal data from 2010-2024. Employing regression discontinuity design (RDD), it extends prior methodologies by Cuñat et al. (2012) and Flammer (2015) to assess whether shareholder engagement is an effective mechanism for aligning management’s short term profit maximizing incentives with shareholder advocated sustainability initiatives. Preliminary findings suggest that passing close-call ESG proposals is associated with a 0.5% increase in daily abnormal returns (DAR), statistically significant at the 10% level, considering only proposals that pass or fail by up to 5% of the vote share. The estimated effect is smaller and less statistically significant than findings presented in comparable studies. While limitations, such as potential vote manipulation at the pass-fail threshold, complicate interpretation of these results, this preliminary finding warrants further investigation, highlighting evolving trends in ESG engagement and U.S. market sentiment towards corporate ESG initiatives. (Less)
Please use this url to cite or link to this publication:
author
Hunter Jivung, Björn Thomas LU
supervisor
organization
course
EKHS34 20242
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Shareholder Engagement, Sustainable Development, Shareholder Activism, ESG Shareholder Proposals, Sustainable Finance, Regression Discontinuity Design
language
English
id
9183736
date added to LUP
2025-02-03 09:16:36
date last changed
2025-02-03 09:16:36
@misc{9183736,
  abstract     = {{This study examines the causal effect of passing close-call ESG shareholder proposals on daily abnormal stock returns (DAR) using a novel dataset of U.S. shareholder proposal data from 2010-2024. Employing regression discontinuity design (RDD), it extends prior methodologies by Cuñat et al. (2012) and Flammer (2015) to assess whether shareholder engagement is an effective mechanism for aligning management’s short term profit maximizing incentives with shareholder advocated sustainability initiatives. Preliminary findings suggest that passing close-call ESG proposals is associated with a 0.5% increase in daily abnormal returns (DAR), statistically significant at the 10% level, considering only proposals that pass or fail by up to 5% of the vote share. The estimated effect is smaller and less statistically significant than findings presented in comparable studies. While limitations, such as potential vote manipulation at the pass-fail threshold, complicate interpretation of these results, this preliminary finding warrants further investigation, highlighting evolving trends in ESG engagement and U.S. market sentiment towards corporate ESG initiatives.}},
  author       = {{Hunter Jivung, Björn Thomas}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{A Vote for Sustainable Development: Investigating ESG Shareholder Engagement in U.S. Capital Markets}},
  year         = {{2025}},
}