Environmental Shareholder Activism

Abstract

Status and reputation have recently gained traction as theoretical mechanisms that, as important parts of decision processes, influence and explain firm behavior. In this study, we examine how environmentally concerned shareholder activists vary in their status and reputation, and how these differences affect firm responsiveness to their concerns. In a sample of 420 resolutions concerning the natural environment in the period 2004 to 2008, our results indicate that firms respond positively to shareholder activists’ high status (a desirable characteristic) and also to their reputation to threaten the firm (an unfavorable characteristic). As such, our study advances a promising explanation to firm responsiveness on environmental issues, rooted in their interpretation of how activists’ status and reputation affect their firm.