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Voice Through Divestment

Author

Listed:
  • Becht, Marco
  • Pajuste, Anete
  • Toniolo, Anna

Abstract

A common argument against divestment is that it discards voting power and has a small effect on stock prices. We argue that divestment is a statement of disapproval that aligns actions with words for effectiveness. We show that the Go Fossil Free divestment movement is a narrative with impact. Viral divestment pledges depressed the share prices of all high carbon emitters, including those with no divestment. Peak virality coincided with a concurrent rise in the carbon premium and preceded net-zero commitments. The introduction of these commitments effectively recast divestment from a moral statement to a strategic exercise in risk management.

Suggested Citation

  • Becht, Marco & Pajuste, Anete & Toniolo, Anna, 2023. "Voice Through Divestment," CEPR Discussion Papers 18328, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18328
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    More about this item

    Keywords

    Divestment; Climate finance; Carbon emissions; Narratives; Twitter; Fossil fuel;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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