The Academic: Professor Elroy Dimson
Award-winning research co-authored by London Business School Professor Elroy Dimson analysed investor engagement with US companies over ten years to 2009 and found that share prices rose by an average of 4.4% in the year after an engagement was concluded. The research concluded that companies tended to experience improvements in operating performance, profitability, efficiency and governance following active ownership by shareholders. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2154724
Case studies Professor Dimson cites include:
a) After information had come to light surrounding company A’s environmental policies and practices, in December of 2006, an asset manager contacted the company via letter to highlight these shortcomings and their growing concern. Following up a month later, the asset manager reminded the company of the need to demonstrate commit to CSR. Following this conversation, a group letter was drafted and sent to the company to the same effect. The result of these shareholder communications was Company A announcing a new commitment to environmental policies and for the AGM to include two environmental asset owner proposals by May 2007.
2) In August of 2005, an asset manager requested a CSR report, expounding the specific points that should be covered. After the letter and further follow ups were neglected, the asset manager, along with a group of other institutional investors, filed a shareholder proposal requested that CCC publish a sustainability report based on the Global Reporting Initiative guidelines. In March 2006, company CCC provided formal feedback relating to sustainability and pledge to announce the report on their website within 60 days.
Dimson, Elroy. “Active Ownership”. Working Paper, London Business School, 2013