1 Introduction
2 Prior research
3 Data and measurement
3.1 Key variable definitions
3.1.1 Measurement of BlackRock ownership
3.1.2 Measurement of firms’ disclosure response
Panel A: Word Lists | ||||||
Topic | Years | Word List | ||||
Climate | 2016, 2017, 2018 | climate, sustainability | ||||
Infrastructure | 2016 | infrastructure | ||||
Technology | 2016, 2017, 2018 | technology | ||||
Tax | 2016, 2017, 2018 | tax, tax reform, repatriation | ||||
Workforce | 2017, 2018, 2019 | skill, worker, wage, job, salary, displace, employ | ||||
Retirement | 2017, 2018, 2019 | savings, retirement, well-being, financial literacy | ||||
Globalization | 2017 | globalization | ||||
Panel B: Policy Word Counts by DisclosureSimilarity | ||||||
Variable | N | Mean | DisclosureSimilarity | Difference | ||
<P50 | >P50 | |||||
General Count: | ||||||
RelevantPolicyWords | 7,900 | 50.460 | 33.208 | 67.687 | 34.479 | *** |
Topic Counts: | ||||||
Climate | 6,227 | 0.261 | 0.241 | 0.282 | 0.041 | * |
Infrastructure | 2,206 | 0.680 | 0.634 | 0.727 | 0.092 | |
Technology | 6,227 | 2.403 | 1.912 | 2.892 | 0.980 | *** |
Tax | 6,227 | 34.17 | 28.18 | 40.14 | 11.95 | *** |
Workforce | 5,694 | 22.53 | 7.958 | 36.95 | 28.99 | *** |
Retirement | 5,694 | 5.142 | 3.986 | 6.286 | 2.301 | *** |
Globalization | 2,138 | 4.751 | 2.220 | 7.194 | 4.974 | *** |
3.2 Sample
Firm-Years | Firms | |
---|---|---|
Compustat Firm-Years with non-missing total assets 2016–2019 | 32,874 | 9,673 |
Exclude: | ||
Firms without CRSP data | (13,380) | (3,844) |
Firm-years without institutional ownership | (2,635) | (697) |
Firm-years with insufficient data for other key controls and FE | (2,701) | (349) |
Firms-years without an 8-K in both the [−90,0] and [1,30] disclosure windows | (6,258) | (1,233) |
Sample for disclosure analysis | 7,900 | 3,550 |
Panel A: Variable Distributions | ||||||||
Variable | N | Mean | P25 | P50 | P75 | |||
∆DisclosureSimilarity | 7,900 | −0.040 | −0.122 | −0.032 | 0.033 | |||
BlackRockBH | 7,900 | 0.634 | 0 | 1 | 1 | |||
BlackRock% | 7,900 | 5.500 | 3 | 5.5 | 8 | |||
PrivateEngagement | 7,900 | 0.366 | 0 | 0 | 1 | |||
StateStreetBH | 7,900 | 0.157 | 0 | 0 | 0 | |||
VanguardBH | 7,900 | 0.566 | 0 | 1 | 1 | |||
StateStreet% | 7,900 | 5.500 | 3 | 5.5 | 8 | |||
Vanguard% | 7,900 | 5.487 | 3 | 5.5 | 8 | |||
NumberBH | 7,900 | 3.263 | 2 | 3 | 5 | |||
IO | 7,900 | 0.764 | 0.592 | 0.893 | 1 | |||
Item202 | 7,900 | 0.645 | 0 | 1 | 1 | |||
Item701 | 7,900 | 0.271 | 0 | 0 | 1 | |||
Item801 | 7,900 | 0.280 | 0 | 0 | 1 | |||
Number8Ks | 7,900 | 1.737 | 1 | 1 | 2 | |||
PriorDiscSimilarity | 7,900 | 0.523 | 0.446 | 0.556 | 0.625 | |||
MVE | 7,900 | 7.073 | 5.684 | 7.103 | 8.414 | |||
MTB | 7,900 | 3.292 | 1.184 | 1.954 | 3.753 | |||
Leverage | 7,900 | 0.608 | 0.410 | 0.611 | 0.835 | |||
AnalystFollow | 7,900 | 0.839 | 0.693 | 0.693 | 1.099 | |||
S&P500 | 7,900 | 0.156 | 0 | 0 | 0 | |||
ROA | 7,900 | −0.010 | −0.008 | 0.003 | 0.016 | |||
Loss | 7,900 | 0.334 | 0 | 0 | 1 | |||
AbnRet | 7,900 | −0.005 | −0.214 | −0.034 | 0.161 | |||
StdRet | 7,900 | 0.025 | 0.015 | 0.021 | 0.031 | |||
Lawsuit | 7,900 | 0.038 | 0 | 0 | 0 | |||
Panel B: Institutional Ownership Correlation Table | ||||||||
Variables | (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) |
(1) BlackRockBH | 1 | |||||||
(2) BlackRock% | 0.830* | 1 | ||||||
(3) StateStreetBH | 0.346* | 0.517* | 1 | |||||
(4) VanguardBH | 0.724* | 0.718* | 0.390* | 1 | ||||
(5) StateStreet% | 0.810* | 0.848* | 0.549* | 0.765* | 1 | |||
(6) Vanguard% | 0.781* | 0.841* | 0.462* | 0.868* | 0.858* | 1 | ||
(7) NumberBH | 0.407* | 0.377* | 0.200* | 0.373* | 0.429* | 0.436* | 1 | |
(8) IO | 0.648* | 0.646* | 0.289* | 0.629* | 0.718* | 0.722* | 0.679* | 1 |
4 Research design and results
4.1 Firms’ disclosure response
DEPVAR = | ∆DisclosureSimilarity | ||||||
---|---|---|---|---|---|---|---|
Pred? | (1) | (2) | (3) | (4) | (5) | (6) | |
BlackRock Variables: | |||||||
BlackRockBH | (+) | 0.009* | 0.009* | 0.009* | |||
(1.920) | (1.912) | (1.696) | |||||
BlackRock% | (+) | 0.003** | 0.003** | 0.003** | |||
(2.566) | (2.564) | (2.155) | |||||
PrivateEngagement | 0.000 | 0.000 | |||||
(0.009) | (0.106) | ||||||
Other IO: | |||||||
StateStreetBH | −0.006 | −0.006 | −0.008 | ||||
(−1.112) | (−1.110) | (−0.865) | |||||
VanguardBH | −0.002 | −0.002 | −0.004 | ||||
(−0.353) | (−0.353) | (−0.796) | |||||
StateStreet% | −0.002 | −0.002 | −0.003 | ||||
(−1.291) | (−1.292) | (−1.485) | |||||
Vanguard% | −0.001 | −0.002 | −0.001 | ||||
(−1.281) | (−1.286) | (−0.750) | |||||
NumberBH | 0.001 | 0.000 | 0.001 | 0.000 | 0.001 | 0.000 | |
(0.643) | (0.495) | (0.643) | (0.496) | (0.436) | (0.272) | ||
IO | −0.012 | −0.009 | −0.012 | −0.009 | −0.005 | −0.002 | |
(−1.250) | (−0.909) | (−1.250) | (−0.911) | (−0.467) | (−0.183) | ||
8-K Controls: | |||||||
Item202 | −0.034*** | −0.034*** | −0.034*** | −0.034*** | −0.025*** | −0.025*** | |
(−10.036) | (−10.088) | (−10.037) | (−10.091) | (−6.120) | (−6.185) | ||
Item701 | 0.002 | 0.002 | 0.002 | 0.002 | 0.005 | 0.005 | |
(0.446) | (0.417) | (0.446) | (0.417) | (1.115) | (1.101) | ||
Item801 | 0.020*** | 0.020*** | 0.020*** | 0.020*** | 0.017*** | 0.017*** | |
(5.673) | (5.736) | (5.672) | (5.737) | (4.018) | (4.084) | ||
Number8Ks | 0.034*** | 0.034*** | 0.034*** | 0.034*** | 0.030*** | 0.030*** | |
(21.113) | (21.101) | (21.107) | (21.095) | (14.832) | (14.852) | ||
PriorNumber8Ks | −0.008*** | −0.008*** | −0.008*** | −0.008*** | −0.007*** | −0.007*** | |
(−9.869) | (−9.949) | (−9.868) | (−9.949) | (−7.202) | (−7.221) | ||
PriorDiscSimilarity | −0.658*** | −0.658*** | −0.658*** | −0.658*** | −0.658*** | −0.658*** | |
(−44.305) | (−44.298) | (−44.340) | (−44.338) | (−33.155) | (−33.168) | ||
Firm Characterisitcs: | |||||||
MVE | −0.009*** | −0.009*** | −0.009*** | −0.009*** | −0.012*** | −0.011*** | |
(−6.401) | (−5.855) | (−6.332) | (−5.815) | (−6.956) | (−6.563) | ||
MTB | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
(0.299) | (0.368) | (0.299) | (0.367) | (1.093) | (1.102) | ||
Leverage | −0.003 | −0.002 | −0.003 | −0.002 | 0.002 | 0.003 | |
(−0.562) | (−0.404) | (−0.562) | (−0.403) | (0.324) | (0.407) | ||
AnalystFollow | −0.004 | −0.004 | −0.004 | −0.004 | −0.008* | −0.007 | |
(−1.242) | (−1.121) | (−1.242) | (−1.120) | (−1.763) | (−1.634) | ||
S&P500 | 0.011 | 0.013** | 0.011 | 0.013* | 0.019* | 0.023** | |
(1.640) | (1.962) | (1.628) | (1.938) | (1.675) | (2.013) | ||
ROA | 0.038 | 0.036 | 0.038 | 0.036 | 0.012 | 0.011 | |
(1.455) | (1.381) | (1.454) | (1.379) | (0.417) | (0.386) | ||
Loss | 0.005 | 0.005 | 0.005 | 0.005 | 0.001 | 0.001 | |
(1.313) | (1.258) | (1.313) | (1.253) | (0.306) | (0.226) | ||
AbnRet | 0.007* | 0.007* | 0.007* | 0.007* | 0.011*** | 0.011*** | |
(1.911) | (1.885) | (1.908) | (1.884) | (2.850) | (2.852) | ||
StdRet | −0.126 | −0.130 | −0.126 | −0.130 | −0.276* | −0.279* | |
(−0.863) | (−0.889) | (−0.863) | (−0.891) | (−1.684) | (−1.700) | ||
Lawsuit | −0.004 | −0.004 | −0.004 | −0.004 | −0.003 | −0.003 | |
(−0.558) | (−0.492) | (−0.557) | (−0.490) | (−0.336) | (−0.284) | ||
Industry/Year FE | Y | Y | Y | Y | Y | Y | |
Observations | 7,900 | 7,900 | 7,900 | 7,900 | 5,009 | 5,009 | |
Adj. R-squared | 0.403 | 0.404 | 0.403 | 0.404 | 0.396 | 0.397 |
4.2 Voting outcomes for firms responding through disclosure
Panel A: Descriptive Statistics | |||||
ISS ItemID | N | Pct BlackRock Oppose | N BlackRock Support | N BlackRock Oppose | |
S0743 | GHG Emissions | 1,284 | 0.035 | 1,239 | 45 |
S0742 | Climate Change | 1,273 | 0.105 | 1,139 | 134 |
S0510 | Link Executive Pay to Social Criteria | 1,267 | 0.009 | 1,255 | 12 |
S0817 | Gender Pay Gap | 1,265 | 0.062 | 1,187 | 78 |
S0999 | Social Proposal | 1,224 | 0.027 | 1,191 | 33 |
S0352 | Company Specific-Governance Related | 659 | 0.049 | 627 | 32 |
S0414 | Improve Human Rights Standards or Policies | 658 | 0.040 | 632 | 26 |
S0731 | Community- Environmental Impact | 645 | 0.033 | 624 | 21 |
S0777 | Report on Sustainability | 559 | 0.095 | 506 | 53 |
S0781 | Recycling | 519 | 0.158 | 437 | 82 |
S0812 | Report on EEO | 518 | 0.050 | 492 | 26 |
S0206 | Establish Environmental/Social Issue Board Committee | 436 | 0.037 | 420 | 16 |
S0779 | Renewable Energy | 424 | 0.012 | 419 | 5 |
S0738 | Product Safety | 347 | 0.029 | 337 | 10 |
S0224 | Require Env/Social Issue Qual. for Director Nominees | 307 | 0.029 | 298 | 9 |
S0412 | Human Rights Risk Assessment | 296 | 0.014 | 292 | 4 |
S0810 | Company-Specific -- Shareholder Miscellaneous | 275 | 0.153 | 233 | 42 |
S0911 | Anti-Social Proposal | 194 | 0.000 | 194 | 0 |
S0205 | Establish Other Governance Board Committee | 176 | 0.023 | 172 | 4 |
S0423 | Operations in High Risk Countries | 169 | 0.024 | 165 | 4 |
S0710 | Facility Safety | 137 | 0.022 | 134 | 3 |
S0815 | Labor Issues - Discrimination and Miscellaneous | 126 | 0.032 | 122 | 4 |
S0890 | Animal Welfare | 111 | 0.045 | 106 | 5 |
S0745 | Climate Change Action | 99 | 0.020 | 97 | 2 |
S0744 | Hydraulic Fracturing | 97 | 0.000 | 97 | 0 |
S0727 | Review Foreign Military Sales | 76 | 0.000 | 76 | 0 |
S0733 | Reduce Tobacco Harm to Health | 58 | 0.000 | 58 | 0 |
S0891 | Animal Testing | 50 | 0.000 | 50 | 0 |
S0736 | Genetically Modified Organisms (GMO) | 48 | 0.000 | 48 | 0 |
S0735 | Health Care - Related | 47 | 0.064 | 44 | 3 |
S0729 | Review Drug Pricing or Distribution | 45 | 0.089 | 41 | 4 |
S0427 | Data Security, Privacy, and Internet Issues | 35 | 0.086 | 32 | 3 |
S0725 | Weapons - Related | 22 | 0.000 | 22 | 0 |
Panel B: Multivariate Evidence | |||||
DEPVAR = | BlackRockOppose | BlackRockOpposeES | |||
Pred? | (1) | (2) | |||
Response Variables: | |||||
∆DisclosureSimilarity | (−) | −0.040** | −0.021** | ||
(−2.283) | (−2.103) | ||||
PrivateEngagement | 0.007 | 0.003 | |||
(1.381) | (1.241) | ||||
Proposal Variables: | |||||
BlackRockOpposePY | 0.162*** | 0.205*** | |||
(6.178) | (5.353) | ||||
Nproposals | 0.010** | 0.006*** | |||
(2.338) | (2.811) | ||||
PctShareholder | 2.185*** | 0.106 | |||
(11.007) | (1.613) | ||||
PctEnvSocial | 0.365 | 3.737*** | |||
(0.818) | (8.257) | ||||
Firm Characteristics: | |||||
BlackRockOwn | −0.004 | −0.002 | |||
(−1.487) | (−1.217) | ||||
PctPassive | −0.009 | −0.003 | |||
(−0.415) | (−0.283) | ||||
IO | −0.047*** | −0.008 | |||
(−3.417) | (−0.916) | ||||
MVE | 0.021*** | 0.005*** | |||
(6.148) | (3.197) | ||||
MTB | −0.001 | 0.000 | |||
(−1.472) | (0.308) | ||||
Cash | 0.024* | 0.019** | |||
(1.665) | (2.241) | ||||
ROA | −0.057 | −0.044* | |||
(−1.182) | (−1.655) | ||||
Sales | 0.004 | 0.001 | |||
(0.358) | (0.187) | ||||
AbnRet | −0.007 | −0.001 | |||
(−1.188) | (−0.461) | ||||
StdRet | −0.369 | −0.010 | |||
(−1.517) | (−0.072) | ||||
Industry/Year FE | Y | Y | |||
Observations | 5,583 | 5,583 | |||
Adj. R-squared | 0.467 | 0.488 |
4.3 Firms’ public policy response
Panel A: LobbySimilarity Validation | |||||
LobbySimilarity <P50 | LobbySimilarity <P50 | ||||
Variable | N | Mean | Difference | ||
Lobby Code Indicators: | |||||
ENV_indicator | 1,780 | 0.185 | 0.178 | 0.193 | 0.014 |
SCI_indicator | 612 | 0.071 | 0.073 | 0.070 | −0.004 |
TAX_indicator | 1,780 | 0.546 | 0.508 | 0.585 | 0.077*** |
LBR_indicator | 1,780 | 0.15 | 0.122 | 0.174 | 0.051*** |
RET_indicator | 1,636 | 0.05 | 0.043 | 0.050 | 0.007 |
TRD_indicator | 577 | 0.291 | 0.260 | 0.322 | 0.061* |
Panel B: Multivariate Evidence | |||||
DEPVAR = | ∆LobbySimilarity | ||||
Pred? | (1) | (2) | |||
BlackRock Variables: | |||||
BlackRockBH | (+) | 0.008* (1.787) | |||
BlackRock% | (+) | −0.001 (−1.125) | |||
PrivateEngagement | 0.003 (1.087) | 0.003 (0.991) | |||
PAC Contributions: | |||||
SupportsDemocrats*BlackRockBH | (+) | 0.030** (2.283) | |||
SupportsDemocrats*BlackRock% | (+) | 0.007*** (3.093) | |||
SupportsDemocrats | −0.047* (−1.815) | −0.074** (−2.320) | |||
Other IO: | |||||
StateStreetBH | −0.005 (−1.447) | ||||
VanguardBH | 0.003 (0.578) | ||||
StateStreet% | 0.001 (0.472) | ||||
Vanguard% | 0.002 (1.388) | ||||
NumberBH | 0.001* (1.737) | 0.001* (1.698) | |||
IO | −0.024*** (−2.873) | −0.025*** (−2.636) | |||
Firm Characteristics: | |||||
LobbySimilarityPY | −0.207*** (−13.726) | −0.205*** (−13.557) | |||
MVE | 0.004*** (2.873) | 0.004** (2.424) | |||
MTB | −0.000 (−0.247) | −0.000 (−0.283) | |||
Leverage | 0.004 (0.561) | 0.003 (0.415) | |||
Employees | 0.002 (1.065) | 0.002 (1.167) | |||
Segments | 0.000 (1.422) | 0.000 (1.219) | |||
Sensitive Industry | 0.028*** (2.692) | 0.029*** (2.686) | |||
Marketshare | −0.015 (−0.067) | −0.010 (−0.045) | |||
Marketshare_sq | 0.048 (0.066) | 0.001 (0.002) | |||
HHI | 0.005 (0.159) | 0.004 (0.132) | |||
ROA | −0.011 (−0.329) | −0.011 (−0.326) | |||
Sales | −0.003 (−0.322) | −0.002 (−0.267) | |||
AbnRet | 0.002 (0.393) | 0.002 (0.460) | |||
Industry/Year FE | Y | Y | |||
Observations | 2,251 | 2,251 | |||
Adj. R-squared | 0.107 | 0.106 |
5 Additional analysis
5.1 Self-selection
DEPVAR = | ∆DisclosureSimilarity | ||
---|---|---|---|
Pred? | (1) | (2) | |
BlackRock Variables: | |||
BlackRockBH | (+) | 0.008* | |
(1.812) | |||
BlackRock% | (+) | 0.004*** | |
(2.711) | |||
PrivateEngagement | 0.000 | 0.000 | |
(0.013) | (0.095) | ||
S&P500 Variables: | |||
S&P500*BlackRockBH | (+)/0 | 0.006 | |
(0.322) | |||
S&P500*BlackRock% | (+)/0 | −0.001 | |
(−0.581) | |||
S&P500 | 0.005 | 0.023 | |
(0.312) | (1.303) | ||
Controls | Y | Y | |
Industry/Year FE | Y | Y | |
Observations | 7,900 | 7,900 | |
Adj. R-squared | 0.403 | 0.404 |
5.2 Robustness to alternative pre-period definitions
DEPVAR = | Pred? | ∆DisclosureSimilarity | |||||
---|---|---|---|---|---|---|---|
(1) | (2) | (3) | (4) | (5) | (6) | ||
PriorDiscSimilarity calc = | Avg. of 3 30-day windows | 30 days, immediately prior | 30 days, one quarter prior | ||||
BlackRock Variables: | |||||||
BlackRockBH | (+) | 0.010** | 0.014** | 0.009* | |||
(1.970) | (2.240) | (1.946) | |||||
BlackRock% | (+) | 0.003** | 0.004** | 0.003** | |||
(2.429) | (2.165) | (2.370) | |||||
PrivateEngagement | 0.001 | 0.001 | 0.001 | 0.002 | 0.001 | 0.002 | |
(0.118) | (0.216) | (0.309) | (0.403) | (0.309) | (0.403) | ||
Other IO: | |||||||
StateStreetBH | −0.007 | −0.017** | −0.006 | ||||
(−1.110) | (−2.149) | (−1.110) | |||||
VanguardBH | −0.002 | −0.003 | 0.002 | ||||
(−0.330) | (−0.468) | (0.499) | |||||
StateStreet% | −0.002 | −0.002 | −0.002 | ||||
(−1.299) | (−0.787) | (−1.444) | |||||
Vanguard% | −0.001 | −0.003** | −0.000 | ||||
(−1.138) | (−2.111) | (−0.311) | |||||
NumberBH | 0.001 | 0.000 | 0.002 | 0.001 | −0.000 | −0.000 | |
(0.446) | (0.307) | (1.037) | (0.827) | (−0.169) | (−0.340) | ||
IO | −0.020* | −0.017 | −0.006 | 0.004 | −0.009 | −0.006 | |
(−1.915) | (−1.536) | (−0.414) | (0.274) | (−0.950) | (−0.636) | ||
8-K/Firm Controls | Y | Y | Y | Y | Y | Y | |
Industry/Year FE | Y | Y | Y | Y | Y | Y | |
Observations | 7,900 | 7,900 | 4,010 | 4,010 | 6,785 | 6,785 | |
Adj. R-squared | 0.524 | 0.524 | 0.442 | 0.442 | 0.391 | 0.391 |
5.3 Robustness to alternative public disclosures
DEPVAR = | ∆MDA_Similarity | ∆RiskFactor_Similarity | |||
---|---|---|---|---|---|
Pred? | (1) | (2) | (3) | (4) | |
BlackRock Variables: | |||||
BlackRockBH | (+) | −0.001 | −0.002 | ||
(−0.627) | (−0.687) | ||||
BlackRock% | (+) | 0.001** | 0.002*** | ||
(2.138) | (3.028) | ||||
PrivateEngagement | 0.000 | −0.000 | −0.002 | −0.002 | |
(0.142) | (−0.003) | (−1.416) | (−1.418) | ||
Other IO: | |||||
StateStreetBH | 0.001 | −0.002 | |||
(0.366) | (−0.819) | ||||
VanguardBH | 0.001 | −0.001 | |||
(0.227) | (−0.444) | ||||
StateStreet% | −0.001 | −0.001* | |||
(−1.037) | (−1.647) | ||||
Vanguard% | −0.000 | −0.001 | |||
(−0.155) | (−1.305) | ||||
NumberBH | 0.000 | 0.000 | 0.000 | 0.000 | |
(0.347) | (0.378) | (0.853) | (0.754) | ||
IO | 0.001 | −0.003 | 0.008* | 0.006 | |
(0.264) | (−0.656) | (1.717) | (1.278) | ||
Other firm controls | Y | Y | Y | Y | |
Industry/Year FE | Y | Y | Y | Y | |
Observations | 8,838 | 8,838 | 8,322 | 8,322 | |
Adj. R-squared | 0.103 | 0.103 | 0.161 | 0.161 |