The unintended consequences of divestment

• 成果类型: Article
• 署名作者: Davies, Shaun William; Van Wesep, Edward Dickersin
• 署名单位: University of Colorado System; University of Colorado Boulder
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2018.03.007
• 发表日期: 2018
• 页码: 558-575
• 关键词: Divestment; Exclusionary investment; Socially responsible investment; Executive compensation

摘要

A divestment campaign aims to depress share prices to induce managers to change firm behavior. Assuming that managers make profit-maximizing decisions in the absence of a campaign, firms that accede to divestors' demands raise short-run share prices but depress long-run profits. Managers who are more interested in short-run prices are therefore more motivated by divestment than managers who care about long-run profits. We show that, as most managerial compensation contracts reward long-run profitability and stock returns, divestment can be ineffective at best, and perhaps counterproductive, rewarding managers who attract divestment campaigns. In a quantification exercise, we show that the wealth of most executives running likely divestment targets in 2015 would be unaffected by even large movements in share prices. Of those affected, a substantial majority would benefit from divestment. (C) 2018 Elsevier B.V. All rights reserved.