Abstract
We reexamine the impact of hedge fund activism on corporate social performance as measured by ESG ratings. Using a high-quality dataset on hedge fund activism, we find that the impact of hedge fund activism on ESG ratings is neither statistically nor economically significant. In our preferred model, relative to control firms, the ESG ratings of target firms increase by 0.033, about 1.6 % of the sample standard deviation, following activist interventions. In addition, we find no evidence that stock market reactions to the announcement of activist interventions are significantly higher for firms with high ESG ratings, inconsistent with the view that hedge fund activism harms corporate social performance to benefit shareholders. © 2025 Elsevier B.V.
| Original language | English |
|---|---|
| Article number | 102801 |
| Journal | Journal of Corporate Finance |
| Volume | 94 |
| Online published | 30 Apr 2025 |
| DOIs | |
| Publication status | Published - Sept 2025 |
Funding
We have no potential conflicts to disclose. Zhao gratefully acknowledges financial support from the National Natural Science Foundation of China , [Grant No. 72472150 ].
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
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SDG 12 Responsible Consumption and Production
Research Keywords
- Corporate social performance
- Corporate social responsibility
- ESG ratings
- Hedge fund activism
Publisher's Copyright Statement
- COPYRIGHT TERMS OF DEPOSITED POSTPRINT FILE: © 2025. This manuscript version is made available under the CC-BY-NC-ND 4.0 license https://creativecommons.org/licenses/by-nc-nd/4.0/.
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