Tag Archives: Cooperman

Investors and stranded asset risk: evidence from shareholder responses to carbon capture and sequestration (CCS) events

John Byrd, Elizabeth S Cooperman
Journal of Sustainable Finance & Investment,Vol. 8, Issue 2, Pages: 185-202.
To avoid catastrophic climate change risk, the case for fossil fuel reserves not being burned has become stronger. This is particularly the case for coal, as the highest emitter of CO2 per unit of energy, with large portions of coal reserves likely to become stranded assets, posing significant risk to investors. Technology in the past has come to the rescue, so investor valuations may depend on perceptions for the success of technology in reducing stranded asset risk. We examine whether coal company shareholders perceive coal as a technologically stranded asset by studying shareholder reactions to news about CCS (carbon capture and sequestration) technology breakthroughs and setbacks. We find significant positive reactions to CCS breakthroughs, but no reaction for setbacks. This suggests investors have embedded expectations of stranded asset risk into their valuations, but also recognize the significance of

Corporations to the Rescue: A New Stakeholder Paradigm? An Overview for U.S. Corporations & Financial Institutions

Elizabeth S. Cooperman
International Review of Accounting, Banking, and Finance, Vol. 10, Issue No. 1/2, Pages: 23-42.
Whether corporations should intervene when governments fail to act on important public issues is an interesting question. With considerable political discord in the US many CEOs have stepped up as social activists by expressing approval or disapproval of public policies providing a platform for discussion to encourage positive government actions. Businesses and major financial institutions have also engaged in environmental activism as well. This paper provides a discussion of a paradigm shift from the single role of corporations to maximize shareholder wealth to considerations for multiple stakeholders, and new roles that CEOs of financial institutions and corporations have taken on including acting as social and ethical mediators for important public policy issues, focusing on key issues in the US

Shareholder Activism for Stranded Asset Risk: An Analysis of Investor Reactions for Fossil Fuel Companies

John Byrd, Elizabeth S Cooperman
International Review of Accounting, Banking and Finance,Vol. 9, Issue 1, Pages: 59-78.
Environmental shareholder activists engage in corporate governance activities including divestment campaigns and shareholder resolutions to get companies to change harmful practices. During 2011 to 2015, activists engaged in both activities to compel major fossil fuel companies to acknowledge unburnable reserves (ie, stranded assets) with their burning associated with rising global temperatures and catastrophic climate change. We examine stock market reactions to key news events for activist activities during 2011 to 2015.

Managing Financial Institutions: Markets and Sustainable Finance

Elizabeth S. Cooperman
Routledge,Pages: 1 to 477.
WE live in times with the world transforming around us, with rapid advances in technology, climate change risks, and accompanying social risks in the aftermath of the global financial crisis. These are challenging times, and the obligation of financial institutions to operate in a responsible way, including engagement in sustainable development, has never been more important, requiring socially and environmentally accountable financial institution management. As Achim Steiner (2015, p. 1) in the foreword to the United Nations Environment Programme (UNEP) Inquiry Report for the Design of a Sustainable Financial System notes:The financial system underpins growth and development. In 2008 we witnessed some of the world’s most sophisticated financial systems spawn the worst global financial crisis seen in decades. As markets in some developed countries collapsed, others in both developed and developing

Let’s talk: an analysis of the “vote vs. negotiated withdrawal” decision for social activist environmental health shareholder resolutions

John Byrd, Elizabeth S Cooperman
Journal of Sustainable Finance & Investment, Volume 4 Issue 3, July 2014, Pages 230-248

Social and environmental shareholder activists engage in a form of corporate social governance by submitting proxy resolutions for a specific change in corporate behavior deemed to be harmful to society. Using a unique data-set for environmental health shareholder resolutions filed by shareholder activists at 70 different companies during 2006–2011, we examine the success rate of resolutions and characteristics affecting the “vote vs. negotiated withdrawal” decision. Supporting a self-interest hypothesis, resolutions …

Let’s talk: an analysis of the “vote vs. negotiated withdrawal” decision for social activist environmental health shareholder resolutions

John Byrd, Elizabeth S Cooperman
Journal of Sustainable Finance & Investment,Vol. 4, Issue 3, Pages: 230-248.

Social and environmental shareholder activists engage in a form of corporate social governance by submitting proxy resolutions for a specific change in corporate behavior deemed to be harmful to society. Using a unique data-set for environmental health shareholder resolutions filed by shareholder activists at 70 different companies during 2006-2011, we examine the success rate of resolutions and characteristics affecting the “vote vs. negotiated withdrawal” decision. Supporting a self-interest hypothesis, resolutions …
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Determinants of corporate carbon reduction targets

John Byrd, Elizabeth S Cooperman, Ken Bettenhausen
Interdisciplinary Environmental Review, Volume 15 Issue 4, January 2014, Pages 271-289

This paper examines attributes affecting a corporation’s choice of an intensity-only (carbon emissions relative to sales, production, etc.) versus an absolute carbon dioxide (CO 2) emissions goal. We investigate alternative hypotheses for this choice including: 1) a high growth hypothesis whereby high growth companies select an intensity goal, to continue to grow without an absolute emission reduction; 2) a high emissions industrial sector hypothesis where firms in high CO 2 emission industries prefer an intensity goal that is …

Context-Based Sustainability and Corporate CO2 Reduction Targets: Are Companies Moving Fast Enough?

John W Byrd, Ken Bettenhausen, Elizabeth S Cooperman
International Review of Accounting, Banking, and Finance, Volume 5 Issue 3/4, Fall/Winter 2013, pp. 87-104.

Corporate sustainability activities are often ad hoc; that is, the extent to which a company moves toward being more sustainable is based on organizational feasibility or economic acceptance rather than true sustainability criteria. This paper examines corporate climate and carbon policy through the lens of context-based sustainability (CBS). CBS argues that true sustainable efforts must consider the ecological capacity of the environment and the fair allocation of this capacity. Only by doing so will the result be an outcome of a livable and sustainable world. The paper combines aspects of physical science (atmospheric CO2 carrying capacity) and philosophy (inter-generational equity and resource allocation) with corporate policy. When applied to climate change this implies examining corporate efforts relative to climate stabilization paths and further examining what a fair allocation of future emissions would be. We look at the documented carbon reductions for a sample of large US corporations including EPA Climate Leadership Award Winners in 2012 and a larger sample of companies from the same industries and compare their carbon reductions to several allocations of the global carbon budget required to limit climate change to just 1°C or 2°C. We find that the emissions path of these US corporations only satisfies the most generous, business-as-usual allocation of carbon emissions.

The Greening of Finance: A Brief Overview.

Elizabeth S Cooperman
International Review of Accounting, Banking & Finance, Volume 5 Issue 1, March 2013, Pp. 47-65.

This paper provides a brief overview of some of the sustainability developments that companies and non-profit groups have undertaken in the finance area including sustainability in banking, venture capital and investment companies, and integration of sustainability as part of corporate social responsibility by large and small companies. Although in practice by many corporations have taken on a more social and environmental focus in terms of sustainable finance and accounting efforts, the field of finance generally …

Do Shareholder Proposals Affect Corporate Climate Change Reporting and Policies?

Byrd, John and Cooperman, Elizabeth
International Review of Accounting, Banking & Finance, Volume 4 Issue 2, pp. 100-126

This study examines the effect of shareholder proxy proposals on climate change issues, using a sample of climate change resolutions submitted to U.S. corporations during 2007 to 2009. We test the hypothesis that shareholder climate-change proposals are effective in getting firms to engage in future actions. We examine differences in future actions based on company responses including: (1) SEC exclusion; (2) negotiation and withdrawal; and (3) proxy proposals voted on, and the percentage of vote received on proposal measures. We find evidence of future actions taken for climate change in response to resolutions, although actions can be relatively minor compared to proposal requests. Future actions occur more often for proposals with negotiated withdrawals. For proposals taken to vote, action occurs more often with a shareholder vote of 20 percent or higher. Extractive industry firms are also shown to be more reluctant to engage in climate change actions versus firms in non-extractive industries.

A Simple Path to Sustainability: Green Business Strategies for Small and Medium-sized Businesses

Andreas, Frederick, Elizabeth S. Cooperman, Blair Gifford, and Graham Russell, eds.
ABC-CLIO, 2011.

Simple Path to Sustainability: Green Business Strategies for Small and Medium-Sized Businesses is designed specifically to help smaller enterprises share in the benefits that flow from sustainability. Built around case histories showcasing 12 small to medium-size enterprises (SMEs) that have outstanding records of sustainability, this unique, hands-on guide will help readers choose and develop sustainability strategies and undertake the marketing and management initiatives necessary for success.

The studies collected here detail each company’s journey from initial idea through building a new culture, engaging stakeholders, gaining competitive advantage, and planning for the future. Each study also covers the challenges encountered, successes and failures, and lessons learned. Cases are centered around distinct themes, including a marketing/public relations perspective, a risk management perspective, an organizational culture perspective, and a new product development perspective. Taken as a whole, these stories do more than inform. They will inspire managers to become green entrepreneurs, undertaking sustainable strategies that can reap surprising benefits.

A reassessment of the excess return phenomenon for initial public offerings of common stock

Glenn A Wolfe, Elizabeth S Cooperman
Journal of Applied Business Research (JABR),Vol. 6, Issue 1, Pages: 40-50.

This study examines the relationship between underpricing for new issues of common stock and issue size (offer price and number of shares) after controlling for an issues risk. Both risk and offer price are found to be significant factors in explaining underpricing. Offer price dominates as an explanatory variable in cold issue markets, while risk dominates in hot issue markets.
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Surplus deferred pension compensation for long-term K-12 employees: an empirical analysis for the Denver Public School Retirement System and four state plans

Michael V Mannino, Elizabeth S Cooperman
Journal of Pension Economics & Finance,Vol. 10, Issue 3, Pages: 457-483.

This study uses a unique data set of retiree characteristics and salary histories for administrators, teachers, and non-professional employees of the Denver Public School Retirement System (DPSRS) to analyze surplus deferred compensation for DPSRS and four state K-12 defined benefit pension plans. We find sizable levels of surplus deferred compensation for each plan, with significant differences across plans, job classes, and age groups. Across plans, differences in cost of living allowances impact the expected present …
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Environmental Risk and Shareholder Returns: Evidence from the Announcement of the Toxic 100 Index

Kenneth Bettenhausen, John Byrd, and Elizabeth S. Cooperman
International Review of Accounting, Banking and Finance, Volume 2, Issue 3, pp. 28~45

This paper examines the stock price response to the announcement that a U.S. company has been named to the Toxic 100 list of the largest air polluters, where rankings are based on data from the Environmental Protection Agency’s (EPA) Risk Screening Environmental Indicator (RSEI) project. We find a significant negative average abnormal return (AR) of – 1.20% in 2006 and – 1.60 % in 2008 over the two – day announcement periods for the Toxic 100 announcements, representing an average drop in market value for the average firm in the index of – $235,944,909 in 2006 and – $237,595,885 in 2008.  Firms in the top 10 ranking of the index had a significantly, larger negative abnormal return than in the bottom 10 ranking. Firms that were not on the 2006 index, but were added to the 2008 index experienced an average abnormal return of -3.5%. The results are interesting for two reasons. One, they show that investors impound environmental risk into their company valuations, implying that environmental disclosure and reporting is important. Two, the results suggest that although analysts had the RSEI data prior to the release of the Toxic 100 lists, they view the Toxic 100 as a significant event. This suggests limits to the semi-strong form of market efficiency, suggesting that the anticipated payoff from computing their own environmental risk assessment may not justify their time and effort required to do so.

Director tenure and the compensation of bank CEOs

John Byrd, Elizabeth S. Cooperman, Glenn A. Wolfe|
Managerial Finance, Vol. 36 Issue 2, pp. 86 – 102

Purpose – The purpose of this paper is to examine how board tenure affects the compensation of CEOs using a sample of 93 publicly traded US banks.

Design/methodology/approach – The paper proposes a CEO allegiance hypothesis whereby long-term relationships with executives and other directors will shift allegiance from shareholders to executives vs a more traditional expertise hypothesis that predicts superior monitoring of executives by directors with longer tenure. A generalized least squares regression methodology is used to examine the relationship between CEO compensation and outside director tenure.

Findings – For the full sample, board tenure variables were found to be insignificant. However, when examining a subsample of firms with CEO tenure of greater than six years or more, the relationship between CEO pay and the median tenure of outside directors becomes positive, supporting a CEO allegiance hypothesis.

Research limitations/implications – On a caveat, since this study relies on data for large bank holding companies over a short period of time, further research is needed to determine if the results carry over to a broader sample of firms and across time.

Practical implications – The results suggest that the independence of outside directors may be compromised when they serve for longer tenure periods together with the same CEO; an important consideration for better corporate governance.

Originality/value – The study provides a unique examination of outside director independence from the perspective of board tenure and the long-term relationships with executives and other directors that may result in allegiance shifts away from shareholders and towards managers.

Regulatory Regime Changes and Acquisition Attributes: The Case of Commercial Bank and Thrift Acquisitions of Thrifts

Fatma Cebenoyan,A. Sinan Cebenoyan, and Elizabeth S. Cooperman
Quarterly Journal of Finance and Accounting Vol. 47, Issue. 1, pp. 27-52

Significant changes in regulations affecting bank/thrift activities during the 1990s provide us with an opportunity to examine shifts in acquisition characteristics as deregulation leads to changes in behavior. Consistent with a regime change hypothesis, we find a structural change in acquisition attributes for pre-and post-deregulation periods. We also report significant differences in target attributes depending on acquirer identity. Our results demonstrate a higher likelihood in the deregulated period after 1994 for banks to acquire …

S&L Performance Persistence: Moral Hazard and Market Discipline

Cooperman, Elizabeth S. with Sinan Cebenoyan and Charles A. Register
Managerial Finance Special Issue on Performance of Financial Service Institutions Vol. 30, Issue 9, p. 56-69

This research examines for performance persistence for the U.S. thrift industry during 1989 to 1994. Results indicate significant performance persistence, with firms in the sample 16 times more likely ot remain in an initial position as a winner or loser than to switch. Consistent with a moral hazard hypothesis, persistent losers exhibit low charter values and greater risk-taking behaviour with the opposite relations for persistent winners. We also find persistent losers to have a significantly higher probability of subsequent takeover, suggesting an effective takeover market for disciplining poor performers.

Ownership Structure, Operating Inefficiency and Regulatory Reform: An Analysis of U.S. Thrifts

Cooperman, Elizabeth S. (with Fatma and Sinan Cebenoyan
and Charles A. Register)
Financial Management, Pages. 43-60

This paper examines the effect of ownership structure on operating inefficiency, as a proxy for operational risk, along with other risk and performance measurs for U.S. thrifts operating in 1989-1994. We find a very significant effect of ownership structure on thrift operating inefficiency and other performance and risk measures, suggesting that ownership structure should be an important regulatory concern.