Study Linking Market Performance to Social Responsibility Wins Moskowitz Prize

Three academics who linked positive market performance to corporate social responsibility (CSR) activities at major publicly traded U.S. companies were presented with the 2012 Moskowitz Prize for Socially Responsible Investing on Oct. 2.

The winners of the Moskowitz Prize, awarded annually by the Haas School's Center for Responsible Business in cooperation with the Social Investment Forum, are Elroy Dimson, emeritus professor of finance, London Business School; Oğuzhan Karakaş, assistant professor, Carroll School of Management, Boston College; and Xi Li, assistant professor, Fox School of Business, Temple University.

In their winning paper, “Active Ownership,” the trio examined highly intensive shareholder engagements on environmental, social, and governance issues from 1999 to 2009. Their findings suggest that CSR activism creates shareholder value, consistent with traditional shareholder or hedge fund activism but on a different scale.

The positive returns documented were most pronounced for engagements on the themes of corporate governance and climate change. Firms with more reputational concerns and higher capacity to implement CSR changes were found more likely to be targeted by CSR activists, and more successful in achieving the engagement objectives. Targeted firms experienced improvements in operating performance, profitability, efficiency, and governance indices after successful engagements. The paper’s findings provide new evidence on the value of shareholder activism on CSR issues.

 “We had a very competitive year in 2012, with nine judges reviewing over 40 studies in detail, so the winning team can take credit for a very strong showing, and a very strong research effort," says Lloyd Kurtz, a lecturer at the Berkeley-Haas Center for Responsible Business, Moskowitz Prize administrator, and chief investment officer at Nelson Capital Management.

The $5,000 Moskowitz Prize is the only global prize recognizing outstanding quantitative research in the field of sustainable, responsible, impact investing. The prize is named for Milton Moskowitz, one of the first investigators to publish comparisons of the financial performance of screened and unscreened portfolios.

Learn more about the Moskowitz Prize