Stock market reaction to corporate stands against racism : Summer 2020

• Autor(a) principal: Gomes, Ana Rita Gago
• Data de Publicação: 2021
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.14/34770
• topic: Non-market strategy; Corporate sociopolitical activity; Racism; Event study; Stock market reaction; Cumulative abnormal return; Stakeholder theory; Resource dependence theory; Estratégia de não-mercado; Estratégias sociopolíticas corporativas; Racismo; Estudo de eventos; Reação do mercado; Retornos anormais acumulados; Teoria de stakeholders; Teoria da dependência de recursos; Domínio/Área Científica::Ciências Sociais::Economia e Gestão

The purpose of this paper is to investigate the market reaction to Corporate Sociopolitical Activity, utilizing an event study methodology to determine the impact of an event on the companies’ abnormal stock returns. The sample consists of Standard & Poor’s 500 Index, US-based companies that made a statement condemning racism after the death of George Floyd on May 25 of 2020. Daily stock return is used to calculate the Cumulative Abnormal Returns (CAR) and Cumulative Average Abnormal Returns (CAAR) for the [-1,1] event window, which includes the day before, the day of, and the day after the event took place. Main results indicate that there is marginal evidence to believe that companies that made those statements saw a positive stock market return. Furthermore, using the Multiple Regression model, it was shown that the level of liberalism by the employees in the firm that made the statement negatively impacts the stock market returns.