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The nail that sticks out: corporate social responsibility and shareholder proposals


We investigate whether shareholders consider firms’ performance in corporate social responsibility (CSR) when submitting proxy proposals. We find that shareholders are more likely to propose governance changes when a firm has more CSR strengths and more CSR concerns. The results hold across popular proposal types, different sponsors, and different categories of CSR. We find similar results for social proposals. Although CSR strengths and concerns are not associated with the percentage of votes received in favor of a proposal, the higher likelihood of receiving shareholder proposals translates into a higher likelihood that at least one shareholder proposal receives majority support at the meeting. Our results suggest managers may avoid distinctively strong (and weak) CSR performance to reduce the costs of standing out.

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Fig. 1

Data Availability

All data used in the paper are publicly available.


  1. Companies publicize their corporate social responsibility (CSR) initiatives in their annual reports and on their websites. For Pepsico, see For Kimberly-Clark, see

  2. ExxonMobil climate change controversy (Wikipedia), Amazon's biggest, hardest-to-solve ESG issue may be its own workers (

  3. We choose a linear probability model because of the well-known incidental variables problem in nonlinear models with fixed effects (Neyman and Scott 1948; Greene 2004). We also find robust results with logit regressions without fixed effects (Table 3, Panel C).

  4. MSCI also provides corporate governance ratings. To avoid any mechanical relationship between CSR and the likelihood of corporate governance proposals, we do not include governance ratings in our analysis.

  5. The average firm has a market cap of $6.4 billion, an ROA of 2.6%, a cash flow of 7.6% of the total assets, and a leverage of 21.4%.

  6. The figure is similar when we use three or four knots instead.

  7. The standard deviation of Strengths is 2.000, and the standard deviation of Concerns is 1.498 (see Table 1 Panel C). The change in the likelihood of receiving at least one governance proposal for a one standard deviation change in Strengths is 0.021*2.000 = 0.042. The change in the likelihood of receiving at least one governance proposal for a one standard deviation change in Concerns is 0.032*1.498 = 0.048.

  8. These results are available upon request.

  9. E-index includes four provisions that restrict shareholders’ ability to vote (i.e., staggered boards, limits to shareholder bylaw amendments, supermajority requirements for mergers, and supermajority requirements for charter amendments) and two antitakeover provisions (i.e., poison pills and golden parachutes) (Bebchuk et al. 2009).

  10. Another popular governance proposal is to allow shareholders to call for a special meeting. We do not examine this proposal type because it is difficult to ascertain which firms already have this provision in their charters.

  11. A shareholder proposal must gain the support of at least 3% of shareholders to appear in the proxy a second time, 6% for a third, and 10% thereafter.

  12. One standard deviation of relative strengths (concerns) is 1.960 (1.340). A change of this magnitude would increase the probability of a firm receiving at least one proposal by 1.960*0.007 = 0.0137 (1.340*0.027 = 0.0362).

  13. Unconditional probabilities of receiving at least one proposal of a certain type are tabulated at the bottom of Table 5.

  14. In untabulated results, we also distinguish between proposals made by institutional investors with or without a CSR focus. We consider an institutional investor to have a CSR focus if its website mentions an SRI/ESG criterion for portfolio selection. The results for both types of institutions resemble the ones reported in the paper for all institutional investors.

  15. For a one standard deviation change in CSR strength in community, diversity, and environment, the likelihood of a firm receiving at least one governance proposal is increased by 4%, 2.4%, and 2.3% respectively. For a one standard deviation change in CSR concerns in products, environment, and community, the likelihood of a firm receiving at least one governance proposal is increased by 3.8%, 3.3%, and 2.5% respectively.

  16. For AdjStrengths, this effect is calculated as 1.96*0.006 = 0.012 (1.2%). For AdjConcerns, it is calculated as 1.34*0.010 = 0.013 (1.3%).

  17. Flammer (2015) examines the value implications of CSR proposals that pass or fail by a small margin between 1997 and 2012 and reports that the adoption of close call CSR proposals leads to positive announcement returns and superior accounting performance.


  19., Accessed on Sept 4, 2021.


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We appreciate the constructive comments from Peter Easton (editor) and two anonymous reviewers. We also thank Renee Adams, Divya Anantharaman, Alex Edmans, Fabrizio Ferri, Samir Ghannam, Wei Jiang, Darius Palia, and seminar participants at Rutgers Business School-Newark and New Brunswick, Baruch University, Fordham University, Temple University, 2018 European Accounting Associations Conference in Milano, and 2019 Journal of Accounting, Auditing & Finance Conference in Santiago, Chile, for many helpful suggestions. Ankita Shinde and Zhiwei Xu provided excellent research assistance.

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Appendix 1: Examples of shareholder governance proposals

Example 1 (sponsor unspecified):



BE IT RESOLVED, that the stockholders of Spectrum Brands, Inc. request that the Board of Directors take the necessary steps to declassify the Board of Directors and establish annual election of directors, whereby directors would be elected annually and not by classes. This policy would take effect immediately, and be applicable to the re-election of any incumbent director who term, under the current classified system, subsequently expires.


We believe that the ability to elect directors is the single most important use of the shareholder franchise. Accordingly, directors should be accountable to shareholders on an annual basis. The election of directors by classes, for three-year terms, in our opinion, minimizes accountability and precludes the full exercise of the rights of shareholders to approve or disapprove annually the performance of a director of directors.

In addition, since only one-third of the Board of Directors is elected annually, we believe that classified boards could frustrate, to the detriment of long-term shareholder interest, the efforts of a bidder to acquire control or a challenger to engage successfully in a proxy contest.

We urge your support for the proposal to repeal the classified board and establish that all directors be elected annually.

Example 2 (an individual sponsor):


Nick Rossi, P.O. Box 249, Booville, CA 95415, claiming beneficial ownership of 500 shares of common stock, submitted this proposal.

RESOLVED. Cumulative Voting. Shareholders recommend that our Board adopt cumulative voting. Cumulative voting means that each shareholder may cast as many votes as equal to number of shares held, multiplied by the number of directors to be elected. A shareholder may cast all such cumulated votes for a single candidate or split votes between multiple candidates, as that shareholder sees fit. Under cumulative voting shareholders can withhold votes from certain nominees in order to cast multiple votes for others.

Cumulative voting won 54%-support at Aetna and 56%-support at Alaska Air in 2005. It also received 55%-support at GM in 2006. The Council of Institutional Investors has recommended adoption of this proposal topic. CalPERS has also recommended a yes-vote for proposals on this topic.

Cumulative voting encourages management to maximize shareholder value by making it easier for a would-be acquirer to gain board representation. Cumulative voting also allows a significant group of shareholders to elect a director of its choice – safeguarding minority shareholder interests and bringing independent perspectives to Board decisions. Most importantly cumulative voting encourages management to maximize shareholder value by making it easier for a would-be acquirer to gain board representation.

Please encourage our board to respond positively to this proposal.

Cumulative voting –

Yes on 2

Appendix 2

Table 11.

Table 11 Variable definitions

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Barnett, M.L., Dimitrov, V. & Gao, F. The nail that sticks out: corporate social responsibility and shareholder proposals. Rev Account Stud (2022).

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