Remember when people cheered when all those CEOs signed a thing saying profits weren't the only thing through the Business Roundtable? Yeah... -- (edited)
Posted by
spamlet
Apr 15 '20, 08:36
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Relative to within-industry peer firms, signatories of the BRT statement have higher rates of environmental and labor-related compliance violations (and pay more in compliance penalties as a result), despite the BRT statement’s specific reference to employees and the environment. These compliance violations do not just reflect trivial matters; BRT signatories are also more likely to have paid a settlement in lawsuits alleging workplace discrimination or wage theft. Signatory firms have higher market shares, suggesting that they may be more likely to face scrutiny in future mergers and acquisitions (M&A) transactions. Consistent with the idea that BRT signatories attempt to head off potential regulatory scrutiny, they spend more on lobbying policy makers than their nonsignatory counterparts.
Moreover, our findings on market shares and lobbying are unlikely to reflect superior business performance because signatory firms report lower stock returns alphas and worse operating margins. Despite this underperformance, we find that BRT signatories’ CEOs are paid more relative to peer firms; this may be associated with the finding that BRT signatories’ boards contain a lower percentage of independent directors, relative to non-signatory firms.
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