19. Institutional Investor Activism

  1. H. Kent Baker and
  2. John R. Nofsinger
  1. Diane Del Guercio1 and
  2. Hai Tran2

Published Online: 12 SEP 2012

DOI: 10.1002/9781118524015.ch19

Socially Responsible Finance and Investing: Financial Institutions, Corporations, Investors, and Activists

Socially Responsible Finance and Investing: Financial Institutions, Corporations, Investors, and Activists

How to Cite

Guercio, D. D. and Tran, H. (2012) Institutional Investor Activism, in Socially Responsible Finance and Investing: Financial Institutions, Corporations, Investors, and Activists (eds H. K. Baker and J. R. Nofsinger), John Wiley & Sons, Inc., Hoboken, NJ, USA. doi: 10.1002/9781118524015.ch19

Author Information

  1. 1

    Associate Professor of Finance, University of Oregon

  2. 2

    Finance Ph.D. Student, University of Oregon

Publication History

  1. Published Online: 12 SEP 2012
  2. Published Print: 28 AUG 2012

ISBN Information

Print ISBN: 9781118100097

Online ISBN: 9781118524015

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Keywords:

  • Rule 14a-8 shareholder proposals;
  • fiduciary duty;
  • pension funds;
  • socially responsible mutual funds;
  • shareholder voting;
  • socially responsible investment

Summary

For the past quarter century, institutional investors have been frequent activist shareholders on corporate governance issues. A large literature of academic research examines whether this activity is effective in influencing target firms and enhancing the performance of both target firms and activists' portfolios. The importance of this question stems from the role of institutional investors as large and influential investors in the capital markets and as financial fiduciaries who are entrusted with the assets of millions of clients and beneficiaries. This chapter examines the many parallels between the issues that institutions face today in incorporating environmental, social, and governance criteria into their investment and activism programs, and the issues arising 25 years ago in the context of corporate governance. In short, socially responsible activism appears to be at the early stages of gaining momentum and legitimacy among mainstream institutional investors, with a steady stream of academic research likely to follow.