Take a Stand or Keep Your Seat: Board Turnover after Social Movement Boycotts

Academy of Management Journal, Forthcoming

55 Pages Posted: 7 Jun 2019 Last revised: 5 Mar 2021

See all articles by Mary-Hunter McDonnell

Mary-Hunter McDonnell

The Wharton School - The University of Pennsylvania

J. Adam Cobb

University of Texas at Austin - Red McCombs School of Business

Date Written: September 29, 2019

Abstract

While prior work shows that a firm’s market performance affects its directors’ loyalty, little is known about how a firm’s social values and perceived social responsibility affect directors’ willingness to serve. In this project, we shed light on this question by exploring how social movement boycotts that challenge a firm’s social responsibility affect the loyalty of board members. We find that boycotts do provoke significant increase in turnover at targeted firms. Further, we show that directors are especially likely to leave when a boycott signals that the firm’s social values conflict with their personal values. Specifically, we find that an ideological match between a board member and the activist challengers predicts exit: liberals are more likely to leave after liberal challenges and conservatives are more likely to leave after conservative challenges. Moreover, we show that turnover is consistent with the rigidity of the right hypothesis in political psychology: conservatives, as compared to liberals, are more prone to entrenchment when their firms faces challenges from the opposition. Our study offers strong evidence that corporate social performance matters to corporate directors and provides insights into the manner in which contentious crises affect the motivation of corporate insiders.

Keywords: board turnover, corporate social responsibility, social movements, political ideology

Suggested Citation

McDonnell, Mary-Hunter and Cobb, J. Adam, Take a Stand or Keep Your Seat: Board Turnover after Social Movement Boycotts (September 29, 2019). Academy of Management Journal, Forthcoming , Available at SSRN: https://ssrn.com/abstract=3379026 or http://dx.doi.org/10.2139/ssrn.3379026

Mary-Hunter McDonnell (Contact Author)

The Wharton School - The University of Pennsylvania ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

J. Adam Cobb

University of Texas at Austin - Red McCombs School of Business ( email )

2110 Speedway, B6000
Austin, TX 78705
United States

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