Abstract
Shareholder activism may not facilitate intended changes in firms. We examine how shareholder social and financial activism arise in firms, and if the resulting heterogeneity of demands can cause firms to limit their ESG disclosure or engage in financial fraud. Using a sample of 576 firms that received shareholder activist proposals between 2006-2018, we find that shareholder activist demands become heterogeneous over time. The effect of shareholder social activists on ESG disclosure is, however, lower for firms that are also subject to financial activism. Similarly, the effect of shareholder financial activism on financial fraud is lower for firms that are also subject to social activism. The results suggest that demands for managers to concurrently address multiple concerns can lead to dysfunctional effects.
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