CEOs are increasingly making public statements on contentious social issues. In this paper, we examine what motivates CEOs to engage in social activism. We show that CEO social activism is a strategic choice and not necessarily an expression of the CEO’s own political views. Republican-donor CEOs are three-times more likely to make social statements with a liberal-slant. They are also more likely to make social statements when their firm’s operating environment is politically polarized, and when their employees are Democrat-leaning. Such statements are associated with a 3% increase in consumer visits to a firm’s stores in Democrat counties without significantly reducing them in Republican counties. CEO activism is also associated with a 0.12% gain in firm value, increased quarterly sales turnover, and a reduced likelihood of shareholder activism on social issues. Our results suggest that corporate actions that appear to be stakeholder-driven can be motivated by economic concerns.
That is on SSRN by Shubhashis Gangopadhyay and Swarnodeep HomRoy, here is the final published version for JFQA. Via the excellent Kevin Lewis.
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