When Does a Stock Boycott Work? Evidence from a Clinical Study of the Sudan Divestment Campaign

Journal of Business Ethics

56 Pages Posted: 10 Jan 2018 Last revised: 23 Sep 2019

See all articles by Ning Ding

Ning Ding

University of New South Wales - Australian School of Business

Jerry T. Parwada

UNSW Business School; Financial Research Network (FIRN)

Jianfeng Shen

UNSW Business School, University of New South Wales

Shan Zhou

The University of Sydney

Multiple version iconThere are 2 versions of this paper

Date Written: September 26, 2017

Abstract

A stock divestment campaign is a common strategy used by social activists to pressure corporations to abandon undesirable practices. However, evidence on the effectiveness of the strategy remains mixed. In this paper we examine the effectiveness of an international stock boycott by studying a large sample of institutional investor transactions in four emerging market stocks targeted by the Sudan divestment campaign from 2001 to 2012. We find evidence of a negative relationship between the intensity of the campaign and the ownership breadth of the stocks, suggesting the effectiveness of the campaign in encouraging investors to divest from targeted companies. Additional analysis indicates that investors in countries that are sympathetic towards CSR activities are more responsive to the divestment campaign. Further, higher campaign intensity is associated with depressed stock prices, which predicts higher future returns. Finally, when analyzing the annual reports and CSR reports, we find preliminary evidence about the effects of the campaign on the targeted companies’ corporate policies and activities in Sudan. In sum, our results support the effectiveness of the stock boycott.

Keywords: Divestment; Stock boycott; Sudan; Institutional investors; Socially responsible investment; Corporate social responsibility

Suggested Citation

Ding, Ning and Parwada, Jerry T. and Shen, Jianfeng and Zhou, Shan, When Does a Stock Boycott Work? Evidence from a Clinical Study of the Sudan Divestment Campaign (September 26, 2017). Journal of Business Ethics, Available at SSRN: https://ssrn.com/abstract=3099268

Ning Ding

University of New South Wales - Australian School of Business ( email )

UNSW Business School
High St
Sydney, NSW 2052
Australia

Jerry T. Parwada

UNSW Business School ( email )

UNSW Business School
High St
Sydney, NSW 2052
Australia

Financial Research Network (FIRN)

UNSW
Sydney, NSW 2052
Australia

HOME PAGE: http://www.firn.org.au

Jianfeng Shen

UNSW Business School, University of New South Wales ( email )

School of Banking and Finance
UNSW Sydney, NSW 2052
Australia

Shan Zhou (Contact Author)

The University of Sydney ( email )

University of Sydney
Sydney, NSW 2006
Australia

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