Volume 24, 2013
Proceedings of the Twenty-Fourth Annual Meeting
Michael Hadani, Jonathan Doh, Marguerite Schneider
An Examination of Corporate and Regulatory Responses to Socially Oriented Investor Activism
Shareholder activism challenges management control over the corporate status quo. Drawing on reactance theory and recent empirical work on corporate political activity (CPA) and on firms’ response to shareholder activism, and testing using data complied by the Interfaith Center for Corporate Responsibility, the Federal Election Commission and others for S&P 500 firms from 1999-2006, we find evidence that CPA buffers firms from corporate social responsibility-related or socially-oriented shareholder proposals. Greater CPA, particularly greater relational CPA, influences responses of the U.S. Securities and Exchange Commission as well as responses of the targeted firm, to help neutralize socially-oriented shareholder activism.