CEO Activism and Firm Value

65 Pages Posted: 6 Oct 2020

See all articles by Anahit Mkrtchyan

Anahit Mkrtchyan

Northeastern University - D’Amore-McKim School of Business

Jason Sandvik

A.B. Freeman School of Business

Vivi Zhu

Tulane University

Date Written: September 24, 2020

Abstract

We investigate the impact of CEO activism, the increasingly common practice of CEOs speaking out on social/political issues, on firm value. CEO activism may be beneficial for shareholders, as it can bolster firms’ relationships with customers and employees. Alternatively, CEO activism may be detrimental if it alienates stakeholders with opposing views. Consistent with the former, we find that CEO activism results in a positive market reaction and higher valuations. These results can be explained by increased employee productivity and innovation, suggesting that CEO activism may improve corporate reputation in labor markets. Additionally, activist CEOs benefit from more future directorships.

Keywords: CEO Activism, firm value, productivity, innovation

JEL Classification: G34

Suggested Citation

Mkrtchyan, Anahit and Sandvik, Jason and Zhu, Zhiwei, CEO Activism and Firm Value (September 24, 2020). Available at SSRN: https://ssrn.com/abstract=3699082 or http://dx.doi.org/10.2139/ssrn.3699082

Anahit Mkrtchyan (Contact Author)

Northeastern University - D’Amore-McKim School of Business ( email )

360 Huntington Ave.
Boston, MA 02115
United States

Jason Sandvik

A.B. Freeman School of Business ( email )

7 McAlister Drive
New Orleans, LA 70118
United States

Zhiwei Zhu

Tulane University ( email )

6823 Saint Charles Avenue
New Orleans, LA
United States

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