Owning the issue pays off: Investor reaction to intensity of corporate socio-political activism

Abstract

We examine investor reaction to corporate socio-political activism (CSA). CSA relates to companies taking a stance on divisive political and social issues. We contribute to existing research on CSA by showing that activism is beneficial for companies, especially when societal discourse about a socio-political issue becomes noisy. In addition, we highlight that investor reaction is more positive for companies engaging in a higher intensity of activism. Investors perceive that the stakeholders will reward companies that decide to take a radical stance by owning and championing a specific socio-political issue to fight for broader societal change.