The thesis "Shared Stakes, Shared Future: The Role of Institutional Common Ownership in Corporate ESG Performance" by David Miles Wolf investigates the effect of an alternative definition of common ownership on corporate ESG performance, a critical issue in portfolio management and sustainability. Common ownership is observed when at least two institutional investors hold significant stakes in a firm. By analysing various thresholds of common ownership, this research aims to understand the effect on ESG performance and provide implications for investors, regulators, firms, and society at large. The findings indicate that while the presence of common ownership within firms initially correlates with lower ESG Scores, it drives improvements in ESG performance over time. Regional differences are evident, with common ownership having a more pronounced impact on ESG performance in the US compared to Europe, likely due to regulatory differences. Sectoral analysis shows varying impacts. Temporal analysis reveals that while short-term effects are often negative long term-impacts, especially after 3+ years, are positive. The findings suggest that sustained common institutional engagement can lead to substantial ESG performance. However, the study acknowledges limitations including variability in ESG metrics, potential selection, and survivorship bias, and limited geographical, sectoral as well as time scope. Future research should explore broader effects of this alternative definition of common ownership on different dimensions of corporate performance, enhance ESG data quality, incorporate additional analysis practices and investigate specific engagement mechanisms.
Shared stakes, shared future: the role of institutional common ownership in corporate ESG performance
Wolf, D. M. (Student). 2 Jul 2024
Student thesis: Master's Thesis