Customers’ Response to Firms’ Disclosure of Social Stances: Evidence from Voting Reform Laws

Forthcoming, Review of Accounting Studies

62 Pages Posted: 9 Jun 2022 Last revised: 15 Nov 2023

See all articles by Hengda Jin

Hengda Jin

Texas A&M University - Mays Business School

Kenneth J. Merkley

Indiana University - Kelley School of Business

Anish Sharma

University of Georgia - J.M. Tull School of Accounting

Karen Ton

Villanova University

Date Written: November 2023

Abstract

We examine customer responses to publicly traded firms speaking out in response to the state of Georgia's voting reform laws. For firms that speak out, we find that customer visits and visitors at their stores decrease relative to the stores of firms that do not speak out. The decrease in customer traffic is stronger for stores in Georgia, predominantly Republican counties, and for firms whose speaking out was emphasized by conservative media sources. The results are weaker for stores in counties with more diverse populations. We also find that total spending, spending per transaction, and spending per customer decrease after firms speak out. Our results are attributed to a decrease in traffic from less frequent customers who spend less time shopping but offset by customers who increase their shopping time. Consistent with offsetting effects, we do not find evidence that speaking out is associated with changes in firm-level financial performance or an equity market response. Our findings highlight different customer responses to speaking out that help us better understand the implications of companies’ engagement in societal issues.

Keywords: ESG; corporate activism; voting reform laws; customer behavior; big data

JEL Classification: G34, M14, M40

Suggested Citation

Jin, Hengda and Merkley, Kenneth J. and Sharma, Anish and Ton, Karen, Customers’ Response to Firms’ Disclosure of Social Stances: Evidence from Voting Reform Laws (November 2023). Forthcoming, Review of Accounting Studies, Available at SSRN: https://ssrn.com/abstract=4124518 or http://dx.doi.org/10.2139/ssrn.4124518

Hengda Jin

Texas A&M University - Mays Business School ( email )

460S Wehner Building, 4353 TAMU
College Station, TX 77840
United States

Kenneth J. Merkley (Contact Author)

Indiana University - Kelley School of Business ( email )

1309 East Tenth Street
Bloomington, IN 47405
United States

Anish Sharma

University of Georgia - J.M. Tull School of Accounting ( email )

Athens, GA 30602
United States

Karen Ton

Villanova University ( email )

800 E. Lancaster Ave
Villanova, PA 19085
United States

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