How Do Socially Controversial Companies Do During a Stressful Time?: Evidence From the Great Recession

30 Pages Posted: 2 Jan 2019

See all articles by Pattanaporn Chatjuthamard

Pattanaporn Chatjuthamard

Sasin GIBA

Patcharawalai Wongboonsin

Chulalongkorn University

Kritika Kongsompong

Sasin GIBA; Sasin GIBA

Pornsit Jiraporn

Pennsylvania State University - School of Graduate Professional Studies (SGPS)

Date Written: December 17, 2018

Abstract

This study investigates the performance of socially controversial companies during a financial crisis. Companies are usually considered controversial if they are involved in controversial businesses such as alcohol, tobacco, firearms, nuclear etc. The results show that controversial firms exhibit higher firm value as well as better accounting performance during the Great Recession than otherwise similar, albeit non-controversial, firms. The results are consistent with the notion that the demand for controversial products remains relatively stable even during a stressful time. Further analysis confirms the results, including random-effects analysis, GMM dynamic panel data analysis, and instrumental-variable (IV) analysis. The results of this paper are particularly relevant to portfolio management, where controversial firms may be added to portfolios to inoculate them from a negative shock brought about by an economic crisis.

Keywords: Sin Stocks, Controversial Stocks, Financial Crisis, Great Recession

JEL Classification: G32, M14

Suggested Citation

Chatjuthamard, Pattanaporn and Wongboonsin, Patcharawalai and Kongsompong, Kritika and Jiraporn, Pornsit, How Do Socially Controversial Companies Do During a Stressful Time?: Evidence From the Great Recession (December 17, 2018). Available at SSRN: https://ssrn.com/abstract=3302397 or http://dx.doi.org/10.2139/ssrn.3302397

Pattanaporn Chatjuthamard

Sasin GIBA ( email )

Bangkok
Thailand

Patcharawalai Wongboonsin

Chulalongkorn University ( email )

Bangkok 10330
Thailand

Kritika Kongsompong

Sasin GIBA ( email )

Bangkok 10330
Thailand

Sasin GIBA ( email )

Bangkok 10330
Thailand

Pornsit Jiraporn (Contact Author)

Pennsylvania State University - School of Graduate Professional Studies (SGPS) ( email )

30 E. Swedesford Road
Malvern, PA 19355
United States
(484) 753-3655 (Phone)

HOME PAGE: http://www.personal.psu.edu/pxj11/index1.html

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