Study Linking Shareholder Resolutions to Firm Performance Wins Moskowitz Prize

Adopting corporate social responsibility (CSR) shareholder resolutions leads to large increases in shareholder value and operating performance, according to the study winning the 2013 Moskowitz Prize for Socially Responsible Investing.

The award was presented today at the 24th annual SRI Conference in Colorado Springs to researcher Caroline Flammer for a paper titled, "Does Corporate Social Responsibility Lead to Superior Financial Performance? A Regression Discontinuity Approach.” 

The Moskowitz Prize is awarded annually by the Haas School's Center for Responsible Business. The only global award recognizing outstanding quantitative research in the field of sustainable and responsible investing, the prize was named for Milton Moskowitz, one of the first investigators to publish comparisons of the financial performance of screened and unscreened portfolios.

In her winning paper, Flammer found that corporate financial performance improved sharply in the immediate wake of shareholder-sponsored CSR proposals that were “close calls” -– those passing by a small margin of votes. Studying close call proposals is appealing since the outcome of the vote is as good as randomized and cannot be anticipated prior to the vote.

Specifically, Flammer’s results show that the stock market reacts positively to the passage of close call CSR proposals (e.g., reducing CO2 emissions, implementing equal employment opportunities policies, etc.). Flammer, an assistant professor in general management at Ivey Business School at Western University in London, Ontario, further documents a significant increase in the company’s return on assets (ROA) and net profit margin (NPM).  

Lloyd Kurtz, chief investment officer at Nelson Capital Management and lecturer at Berkeley-Haas, and Nadja Guenster, visiting professor at Berkeley-Haas, serve as the faculty co-chairs of the Moskowitz Prize. They lead the prize selection committee, an expert panel of judges from both academic and investment circles.

In the 18-year history of the Moskowitz Prize, 2013 set a record for the number of award submissions. “The Moskowitz Prize and the recognition afforded to the winner each year have gained a lot of traction among academics working in the field of sustainable investing," remarked Kurtz. "This past summer was a busy time for us, with 11 judges reviewing 49 studies to select a winner. Dr. Flammer can take credit for a strong research effort that impressed us all.”

Since its inception in 1996, the Moskowitz Prize has been awarded annually at The SRI Conference, the largest and longest running conference serving investors and investment professionals in the sustainable, responsible, impact (SRI) investment industry in North America. The SRI Conference is produced by First Affirmative Financial Network.

The 2013 Moskowitz Prize sponsors are Calvert Group, First Affirmative Financial Network, Nelson Capital Management, Rockefeller and Co., Neuberger Berman, and Trillium Asset Management.

Read the winning paper

More information about the Moskowitz Prize