A new take on voice: the influence of BlackRock’s ‘Dear CEO’ letters

Abstract

We examine whether broad-based public engagement by institutional investors influences the behavior of portfolio firms. We investigate this question in the context of BlackRock’s annual Dear CEO letter, which in recent years has called for portfolio firms to acknowledge and quantify the impact of environmental and regulatory factors on their firms. We find that portfolio firms’ disclosures during the post-letter period reflect topics similar to those discussed in the letters, controlling for a variety of firm and disclosure characteristics and the occurrence of private engagements. Moreover, BlackRock appears to value these additional disclosures, as it more often votes with management on shareholder proposals during subsequent annual shareholder meetings. Finally, motivated by BlackRock’s attempts to mobilize firms toward its specific policy recommendations, we also provide some evidence that firms’ lobbying efforts during the post-letter period become more aligned with the issues highlighted in the letter, especially when firms’ share BlackRock’s policy preferences ex ante. Taken together, our evidence suggests that portfolio firms are responsive to BlackRock’s public engagement efforts.

Corporate social responsibility disclosure, dividend payments and firm value – Relations and mediating effects

“…Moreover, CSR disclosures can attract institutional investors that want to include in their portfolios firms which they consider aligned with their policies. For example, Pawliczek et al (2021) analyses the relation between BlackRock and firms on the issue of sustainability reporting, given that BlackRock's CEO has made it known that they expect more CSR engagement from the firms they invest in.…”

“…Thus, dividends play the role of reassuring investors that resources are not being squandered. Managers are aware of this dynamic (Ambarish et al, 1987), and that investors will carefully assess the CSR disclosures made by firms (Pawliczek et al, 2021). This leads us to expect that managers are more likely to pay higher dividends when they make more CSR disclosures.…”

Public relations, activism, and the culture of assertion: The case of Blackrock’s Larry Fink and the letter to the CEOs

“…In this study, we are focused on a public relations activist who, despite not working in a public relations position, mirrors this disregard for dialogue in favor of assertions: Larry Fink, CEO of the world’s largest asset management firm BlackRock, who publishes an annual Letter to the CEOs each January on corporate governance and capitalism, with an intent to influence the behavior of other companies (Pawliczek et al, 2021). While scholarship tends to describe both activism and traditional PR activities as oriented toward valuing dialogue, we argue that these letters operate differently.…”

Can Digital Economy Promote Energy Conservation and Emission Reduction in Heavily Polluting Enterprises? Empirical Evidence from China

“…In addition, we consider the impact of two relevant market forces: Environmental, Social, and Governance (ESG) investment and quantitative easing (QE) policies [ 55 ]. First, the sample period of this paper coincides with the massive increase in popularity of ESG investing [ 56 , 57 ], The increase in the fraction of institutional investors that follow ESG policies is likely correlated with the digitalization trends in China. By construction, as more institutional investors incorporate ESG aspects into their portfolio allocation decisions firms become more environmentally friendly due to investor’s preferences and improve CECER.…”