Working Papers

1. Propagation of E&S Concerns in Firm Networks: Evidence from Shareholder Proposals in the US 

Single-authored Job Market Paper

Abstract: This paper explores how E&S concerns spread out in a multilayer network of firms based on an epidemiological model. I build the network using four layers: geographic proximity, common ownership, director interlock, and industrial peers. Based on E&S shareholder proposals targeting S&P 500 firms from 2005 to 2020, I find that E&S concerns (the ‘disease’) will die out after several waves. Besides, firms that are more central in the network, firms with larger market capitalization, and firms with higher Big Three (i.e., BlackRock, State Street, and Vanguard) ownership have a greater propensity to be targeted. During periods with high media coverage on ESG, the network characteristics have more prediction power on new transmissions. Network characteristics are more significant predictor on E issues than S issues. I further find that common ownership is of stronger effect in propagating E&S concerns compared to other channels. However, there is no evidence of improved accounting performance or increased ESG scores in the following years after the E&S engagements.

2. Oracles of the Vote: Predicting the Outcomes of Proxy Contests for Board Seats

Coauthored with Scott Hirst (Boston University) and Oğuzhan Karakaş (University of Cambridge)

Abstract: This paper examines proxy contests and the value of shareholder voting rights (i.e., the voting premium) estimated using option prices. Using a sample of 1,074 proxy contests for board seats at U.S. publicly listed firms from 1994 to 2020, we find that voting premium helps predict the outcomes of those proxy contests. Specifically, increased voting premiums around campaign announcements are associated with a higher likelihood of the contest being subsequently settled or going to a vote, and a lower likelihood of the contest being withdrawn. Further, the likelihood of dissidents being elected if the contest goes to a vote increases with the voting premium around the record date.

3. Do Financial Markets Price the Real Effects of Pollution? Evidence from Screening-Level Environmental Indicators

Coauthored with Oğuzhan Karakaş (University of Cambridge) and Lakshmi Naaraayanan (London Business School)

Abstract: This paper examines whether financial markets price the human health risks of industrial pollution. Using the EPA’s RSEI, we distinguish between emission quantity, toxicity, and population-weighted exposure risk for publicly listed U.S. firms from 1991 to 2020. We find that markets price the volume of toxic releases but not the potential health risks those releases pose. Risk-adjusted emissions predict future regulatory enforcement but not returns, suggesting mispricing. Our results reveal investor attention to salient emission quantities rather than modeled human exposure, highlighting a distinct externality channel – health risk – that remains underpriced relative to well-studied risks associated with carbon emissions intensity.

Work-in-Progress

• Shareholder Activism Under Political Uncertainty (with Zhenkai Ran, University of Cambridge)

Publications

• Rau, Raghavendra and Ting Yu (2023) A Survey on ESG: Investors, Institutions, and Firms. China Finance Review International https://doi.org/10.1108/CFRI-12-2022-0260.

•  Atta-Darkua, Vaska, David Chambers, Elroy Dimson, Zhenkai Ran, and Ting Yu (2020) Strategies for Responsible Investing: Emerging Academic Evidence. The Journal of Portfolio Management, 46 (2): 26-35.

•  Yu, Ting, Zhiwei Lin, and Qingliang Tang (2018) Blockchain: The Introduction and Its Application in Financial Accounting. The Journal of Corporate Accounting & Finance, 29 (4): 37-47.