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This paper explores green activist investing, whereby environmentally driven activists launch campaigns to promote green shareholder proposals aimed at reducing firms’ environmental impacts. Before 2017, such proposals were rare and seldom supported by large institutional investors. However, since 2020, their number has surged, averaging 55 per year, ranging from 30 in 2020 to 96 in 2023, with a variable success rate averaging 17%. The success of green proposals hinges on proxy votes by pivotal voters, mainly large institutional shareholders, who hold significant stakes across many firms. Together, BlackRock, State Street, and Vanguard alone own the largest shares in 75% of S&P 500 firms and cast 25% of proxy votes. These votes are publicly observable. Hence, this paper models green activism and proxy voting by strategic institutional blockholders who have heterogeneous reputational concerns and varying levels of commitment to green values.

The rewards received by financial managers depend on both relative performance (e.g., fund inflows based on fund rankings, promotions based on peer comparisons) and absolute performance (e.g., bonus payments for meeting accounting targets, hedge-fund incentive fees). Both relative and absolute performance rewards engender risk-taking. In this paper, we show that these two sources of risk-taking, relative and absolute performance rewards, mitigate the risk-taking incentives produced by the other. This mutual incentive-reduction effect generates a number of novel predictions about the relationship of managerial risk-taking with the structure of relative and absolute performance rewards.

How can fragility be averted in open-end mutual funds? In recent years, markets have observed an innovation that changed the way open-end funds are priced. Alternative pricing rules (known as swing pricing) adjust funds’ net asset values to pass on funds’ trading costs to transacting shareholders. Using unique data on investor-level transactions in U.K. corporate bond funds, we show that swing pricing eliminates the first-mover advantage arising from the traditional pricing rule and significantly reduces outflows during market stress. Swing pricing also reduces concavity in the flow-performance relationship and dilution in fund performance.