Corporate socio-political activism and retail investors: Evidence from the Black Lives Matter campaign |
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Institution: | 1. University of Bristol Business School, Howard House, Queens Avenue, Bristol BS8 1SD, United Kingdom;2. Bangor University, Bangor Business School, Hen Goleg, College Rd, Bangor, Gwynedd LL57 2DG, United Kingdom |
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Abstract: | This study investigates retail investor responses to corporate engagement in corporate socio-political activism (CSA). Using manually collected evidence of companies' support for the Black Lives Matter (BLM) campaign, we find that speaking up in support of BLM attracts retail investor attention. However, it influences their investment decisions only if speaking up is backed up by a monetary donation to BLM-related causes on the same day. This effect is observed for companies that have black directors on their board and companies headquartered in Democrat-leaning states. There is no corresponding increase in firm value. Our results suggest that retail investor preferences for companies that engage in CSA are likely guided by moral sentiment. |
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