Nearly a year ago, the Business Roundtable fomented interest in so-called "stakeholder capitalism" by issuing this statement. The statement garnered 181 signatories who proclaimed "a fundamental commitment to all of our stakeholders".
In a forthcoming paper, Aneesh Raghunandan at the London School of Economics and Shivaram Rajgopal at the Columbia Business School took a look at the companies who signed the statement and reached some interesting conclusions. They found that relative to within-industry peer firms, the signatories:
- commit environmental and labor-related compliance violations more often (and pay more in compliance penalties);
- have higher market shares;
- spend more on lobbying policymakers; and
- report lower stock returns alphas and worse operating margins.
According to the authors, a key takeaway of their study "is that investors ought to be vigilant when assessing claims of stakeholder-oriented practices by firms and ESG funds". The study is available here.