Shareholder Activism and CSR Disclosure

Our study investigates how shareholder proposal, as an evidence of shareholder activism affects CSR disclosure. Based on the non-legal binding nature of shareholder proposals, our study explores the impact of CSR shareholder proposal activism on the extent of CSR disclosure after controlling for corporate governance mechanisms existent within the firm. Based on a sample of 466 firm-years between 2006 and 2014, we find that CSR shareholder proposals do not significantly change the extent of CSR disclosure. Although we find that shareholder proposals increase social disclosure at the end of the first year, this impact does not continue in the second year. We also find that outside directors, as an internal governance mechanism, substitutes with the monitoring effects from shareholder proposals on the extent of CSR disclosure. Our research contributes to prior studies by exploring the monitoring effects of shareholder proposals on CSR disclosure.