December 19, 2024 This article has been reviewed according to Science X's editorial process and policies . Editors have highlightedthe following attributes while ensuring the content's credibility: fact-checked peer-reviewed publication trusted source proofread by Suzi Morales, University of Texas at Austin Stock investments by politicians have long drawn public scrutiny. Under a 2012 law , members of the U.S. Congress must disclose transactions over a $1,000 threshold. Early in the COVID-19 pandemic, lawmakers on both sides of the aisle were criticized for trading in everything from remote work technologies to telemedicine. But less attention has been paid to what companies might gain from having politicians as shareholders. New research from Texas McCombs finds one indirect benefit: It might insulate companies from activist investors such as Carl Icahn or Nelson Peltz, who press for changes in their operations to drive up stock prices. Timothy Werner, professor of business, government, and society, found that having shareholders who are Democratic members of Congress tends to discourage such investors. Typically, he says, "An activist investor 's main strategy is to come into a firm, cut costs, and effect changes in the hopes of quickly driving up shareholder value or stock price. Then, they sell and exit the firm." Often, their cuts include corporate social responsibility (CSR) or environmental, social, and governance (ESG) programs. Democratic politicians are more likely to be concerned about such initiatives, whether because of their own ideological bents or because they want to appear associated with companies that support such causes. Activist investors can find out whether Democratic politicos are shareholders from public investment disclosures, as well as websites and social media feeds that track politicians' investments. They'll tend to steer away from such companies, Werner theorized, to avoid public battles with Democrats, who are more likely to fight cuts to CSR and ESG. "If you look nationwide, if you look at the most recent presidential campaign, there's been a real emergence of a partisan divide around corporate social responsibility and ESG," Werner says. To test his theory, with co-authors Mark DesJardine of Dartmouth College and Wei Shi of the University of Miami, Werner looked at data on politicians' investments in S&P 1500 companies from 2004 to 2018. He correlated them with challenges to those companies by activist investors. " Shareholder Activism and the Deterrence Effect of Democratic Politician Shareholders " is published in Organization Science . The researchers found: Having even one Democratic politician as a shareholder decreased the likelihood of an activist challenge 10%. The presence of a highly prominent Democrat reduced these chances further. So did the presence of a more Democratic-leaning board of directors. The research did not find an effect from having Republican politicians as shareholders, Werner says, because they tend to be less interested in regulating businesses and less likely to scare off financial activists. His findings don't mean that companies should court individual lawmakers to invest, he says. That would invite ethical concerns and public scrutiny. It's safer to stick with traditional relationship-building efforts, such as lobbying. Is the Democratic deterrence effect helpful for average investors? Werner says it depends on their financial and ideological goals. Some don't want to dissuade activist investors, because they can encourage fiscal discipline and boost stock prices in the short run. But an investor who cares about CSR and ESG may welcome the effect, he says. "If someone's thinking about the social and environmental performance as well, and they're willing to make a trade-off in terms of financial gain, they might be happy to see these folks deterred." More information: Mark R. DesJardine et al, Shareholder Activism and the Deterrence Effect of Democratic Politician Shareholders, Organization Science (2024). DOI: 10.1287/orsc.2023.17495 Journal information: Organization Science Provided by University of Texas at AustinHezbollah leaders also signalled tentative backing for the US-brokered deal, which offers both sides an off-ramp from hostilities that have driven more than 1.2 million Lebanese and 50,000 Israelis from their homes. An intense bombing campaign by Israel has killed more than 3,700 people, many of them civilians, Lebanese officials say. But while the deal, set to take effect early Wednesday, could significantly calm the tensions that have inflamed the region, it does little directly to resolve the much deadlier war that has raged in Gaza since the Hamas attack on southern Israel in October 2023 that killed 1,200 people. Hezbollah, which began firing scores of rockets into Israel the following day in support of Hamas, has previously said it would keep fighting until there was a stop to the fighting in Gaza. Here’s what to know about the tentative ceasefire agreement and its potential implications: The agreement reportedly calls for a 60-day halt in fighting that would see Israeli troops retreat to their side of the border while requiring Hezbollah to end its armed presence in a broad swathe of southern Lebanon. Us President Joe Biden said on Tuesday that the deal is set to take effect at 4am local time on Wednesday. Under the deal, thousands of Lebanese troops and UN peacekeepers are to deploy to the region south of the Litani River. An international panel lead by the US would monitor compliance by all sides. Mr Biden said the deal “was designed to be a permanent cessation of hostilities.” Israel has demanded the right to act should Hezbollah violate its obligations. Lebanese officials have rejected writing that into the proposal. Israel’s defence minister, Israel Katz, insisted on Tuesday that the military would strike Hezbollah if the UN peacekeeping force, known as Unifil, does not provide “effective enforcement” of the deal. A Hezbollah leader said the group’s support for the deal hinged on clarity that Israel would not renew its attacks. “After reviewing the agreement signed by the enemy government, we will see if there is a match between what we stated and what was agreed upon by the Lebanese officials,” Mahmoud Qamati, deputy chair of Hezbollah’s political council, told the Qatari satellite news network Al Jazeera. “We want an end to the aggression, of course, but not at the expense of the sovereignty of the state” of Lebanon, he said. The European Union’s top diplomat, Josep Borrell, said on Tuesday that Israel’s security concerns had been addressed in the deal also brokered by France. After months of cross-border bombings, Israel can claim major victories, including the killing of Hezbollah’s top leader, Hassan Nasrallah, most of his senior commanders and the destruction of extensive militant infrastructure. A complex attack in September involving the explosion of hundreds of walkie-talkies and pagers used by Hezbollah was widely attributed to Israel, signalling a remarkable penetration of the militant group. The damage inflicted on Hezbollah has come not only in its ranks, but to the reputation it built by fighting Israel to a stalemate in the 2006 war. Still, its fighters managed to put up heavy resistance on the ground, slowing Israel’s advance while continuing to fire scores of rockets, missiles and drones across the border each day. The ceasefire offers relief to both sides, giving Israel’s overstretched army a break and allowing Hezbollah leaders to tout the group’s effectiveness in holding their ground despite Israel’s massive advantage in weaponry. But the group is likely to face a reckoning, with many Lebanese accusing it of tying their country’s fate to Gaza’s at the service of key ally Iran, inflicting great damage on a Lebanese economy that was already in a grave condition. Until now, Hezbollah has insisted that it would only halt its attacks on Israel when it agreed to stop fighting in Gaza. Some in the region are likely to view a deal between the Lebanon-based group and Israel as a capitulation. In Gaza, where officials say the war has killed more than 44,000 Palestinians, Israel’s attacks have inflicted a heavy toll on Hamas, including the killing of the group’s top leaders. But Hamas fighters continue to hold scores of Israeli hostages, giving the militant group a bargaining chip if indirect ceasefire negotiations resume. Hamas is likely to continue to demand a lasting truce and a full Israeli withdrawal from Gaza in any such deal. Palestinian Authority President Mahmoud Abbas offered a pointed reminder on Tuesday of the intractability of the war, demanding urgent international intervention. “The only way to halt the dangerous escalation we are witnessing in the region, and maintain regional and international stability, security and peace, is to resolve the question of Palestine,” he said in a speech to the UN read by his ambassador.
Nigeria can’t afford another civil war – Gowon