Strategic CEO Activism in Polarized Markets

Swarnodeep Homroy and Shubhashis Gangopadhyay

♦ We show that CEO social activism is a strategic choice and not necessarily an expression of the CEO’s political views. Republican-donor CEOs are 3 times likelier to make social statements with a liberal slant. These social statements are more likely when a firm’s operating environment is politically polarized, and employees are Democrat-leaning. Such statements are associated with a 3% increase in consumer visits to a firm’s Democrat-county stores without significantly decrease in Republican counties. CEO activism is also associated with a 0.12% gain in firm value, increased sales turnover, and a reduced likelihood of shareholder activism on social issues.

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