The Side Effect of Political Standing: Corporate Activism and Its Impact on Stock Returns
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...
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| Format: | Article |
| Language: | English |
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Cogitatio
2023-05-01
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| Series: | Politics and Governance |
| Subjects: | |
| Online Access: | https://www.cogitatiopress.com/politicsandgovernance/article/view/6306 |
| _version_ | 1797825355249090560 |
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| author | Teresa Pintado Blanco Carlota López-Aza Joaquín Sánchez Pablo Gutiérrez‐Rodríguez |
| author_facet | Teresa Pintado Blanco Carlota López-Aza Joaquín Sánchez Pablo Gutiérrez‐Rodríguez |
| author_sort | Teresa Pintado Blanco |
| collection | DOAJ |
| description | 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. |
| first_indexed | 2024-03-13T10:52:54Z |
| format | Article |
| id | doaj.art-fbe18b1f14624612b6d52b04125d2774 |
| institution | Directory Open Access Journal |
| issn | 2183-2463 |
| language | English |
| last_indexed | 2024-03-13T10:52:54Z |
| publishDate | 2023-05-01 |
| publisher | Cogitatio |
| record_format | Article |
| series | Politics and Governance |
| spelling | doaj.art-fbe18b1f14624612b6d52b04125d27742023-05-17T09:00:59ZengCogitatioPolitics and Governance2183-24632023-05-0111213814610.17645/pag.v11i2.63062958The Side Effect of Political Standing: Corporate Activism and Its Impact on Stock ReturnsTeresa Pintado Blanco0Carlota López-Aza1Joaquín Sánchez2Pablo Gutiérrez‐Rodríguez3Department of Marketing, Universidad Complutense de Madrid, SpainDepartment of Marketing, Universidad Complutense de Madrid, SpainDepartment of Marketing, Universidad Complutense de Madrid, SpainDepartment of Business Administration, Universidad de León, SpainTaking 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.https://www.cogitatiopress.com/politicsandgovernance/article/view/6306corporate activismcorporate social advocacycorporate social responsibilityfirm value |
| spellingShingle | Teresa Pintado Blanco Carlota López-Aza Joaquín Sánchez Pablo Gutiérrez‐Rodríguez The Side Effect of Political Standing: Corporate Activism and Its Impact on Stock Returns Politics and Governance corporate activism corporate social advocacy corporate social responsibility firm value |
| title | The Side Effect of Political Standing: Corporate Activism and Its Impact on Stock Returns |
| title_full | The Side Effect of Political Standing: Corporate Activism and Its Impact on Stock Returns |
| title_fullStr | The Side Effect of Political Standing: Corporate Activism and Its Impact on Stock Returns |
| title_full_unstemmed | The Side Effect of Political Standing: Corporate Activism and Its Impact on Stock Returns |
| title_short | The Side Effect of Political Standing: Corporate Activism and Its Impact on Stock Returns |
| title_sort | side effect of political standing corporate activism and its impact on stock returns |
| topic | corporate activism corporate social advocacy corporate social responsibility firm value |
| url | https://www.cogitatiopress.com/politicsandgovernance/article/view/6306 |
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