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The Side Effect of Political Standing: Corporate Activism and Its Impact on Stock Returns
[journal article]
Abstract Taking sides on controversial political issues such as gun control, abortion, immigration, or diversity is increasingly common among large companies. What remains unclear, however, is whether this type of strategy - known as "corporate activism" - has positive or negative effects on these companies.... view more
Taking sides on controversial political issues such as gun control, abortion, immigration, or diversity is increasingly common among large companies. What remains unclear, however, is whether this type of strategy - known as "corporate activism" - has positive or negative effects on these companies. The use of the concept of corporate activism on different variables affecting the companies is relatively recent. This article analyses the effect of corporate activism on the stock market performance of US companies through the analysis of the sample collected. Although there are some recent articles published on this topic, none of them measures the risk associated with the use of this type of strategy. For the development of the research, the well-known Fama–French modelling framework is applied to estimate the differences between companies that participate in corporate activism initiatives versus those that remain outside this strategy. The findings complement previous research showing that companies that use corporate activism have lower market risk than companies that do not engage in this type of strategy. These results can be useful in identifying the advantages and disadvantages of corporate activism initiatives and, in addition, they can also help companies to evaluate the use of corporate activism as a strategic tool and as a driver of social change.... view less
Keywords
social responsibility; enterprise; stock quotation; United States of America; strategic management; representation of interests; corporate social responibility; organizational culture
Classification
Political Process, Elections, Political Sociology, Political Culture
Management Science
Free Keywords
corporate activism; corporate social advocacy; firm value
Document language
English
Publication Year
2023
Page/Pages
p. 138-146
Journal
Politics and Governance, 11 (2023) 2
Issue topic
Hate Speech, Demonization, Polarization, and Political Social Responsibility
ISSN
2183-2463
Status
Published Version; peer reviewed