Browsing by Author "Heinhold, Felix Harald"
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- Be yourself, it matters what they say : investor reaction to corporations condemning the U.S. Capitol RiotPublication . Heinhold, Felix Harald; El Nayal, OmarPurpose: Stakeholders exert increasing pressure on firms to speak up on controversial sociopolitical issues, thus engaging in Corporate Sociopolitical Activism (CSA). Previous research on the financial consequences of firms taking positions on polarizing issues is scarce and inconsistent. Therefore, this study analyzes the investor reaction to firms engaging in CSA by condemning the U.S. Capitol Riot. A particular focus lies on the moderating effect of the engagement’s perceived authenticity. Methodology: An event study was run on a sample of 158 firm-statements given by components of the S&P 500 in the aftermath of the U.S. Capitol Riot in early 2021. The cumulative abnormal returns (CARs) obtained in the event study served as the dependent variable for several multiple regression models used to analyze the moderating effect of the statements’ perceived authenticity. The perceived authenticity is reflected in the firm’s organizational ideology, the message’s content, and the firm’s previous engagements in CSA. Findings: We find marginal evidence to confirm the positive effect of condemning the U.S. Capitol Riot on firm value. The results further suggest that a liberal organizational ideology and making a substantive statement positively affect the investor reaction. Building on stakeholder theory, this phenomenon can be explained by considering CSA as a means for firms to signal the alignment of their values with those of their stakeholders, leading to competitive advantage. Originality: This paper advances the literature of nonmarket strategy and particularly contributes to the research on CSA by analyzing the investor reaction to firms condemning the U.S. Capitol Riot.