Joint Meeting of the Mid-Atlantic and Northeast Regions

Managers’ Rhetorical Strategies in Proxy Statements to Persuade Shareholders Against Activists’ Environmental and Social Proposals

• In Event: ESG/Sustainability

Abstract

We study how firms use environmental and social (ES) disclosures in proxy statements to persuade shareholders to vote in their favor on ES proposals. These proposals are gaining public attention and support from shareholders as activists push firms to improve their ES performance. However, managers likely use rhetorical strategies to persuade shareholders and deflect the threat from shareholder activism. We propose that proxy statements containing more (1) voluntary ES contents, (2) past performance data, (3) specific information, and (4) optimism are more persuasive. Applying natural language processing to 1,708 ES shareholder proposals in 1,055 proxy statements from 2007 to 2021 to identify such content, we find that these rhetorical strategies are associated with proxy advisor recommendations and shareholder votes in support of managers, and the effects of rhetorical strategies on votes are incremental to the proxy advisors’ recommendations.

Authors

• Sudipta Basu, Temple University

• Alice Lee, Temple University

• Todd Schifeling, Temple University