The Stock Market Impact of Social Pressure: The South African Divestment Case

QUARTERLY REVIEW OF ECONOMICS AND FINANCE

Posted: 12 Mar 1997  

Laurian Casson Lytle

Firstar Investment Research and Management Company

O. Maurice Joy

University of Kansas

Abstract

Using the South African divestment case, this study tests the hypothesis that social pressure affects stock returns. Both short-run (3-, 11-, and 77-day periods) and long-run (13-month periods) tests of stock returns surrounding U.S. corporate announcements of decisions to stay or leave South Africa were performed. Tests of the impact of institutional portfolio managers to divest stocks of U.S. firms staying in South Africa were also performed. Results indicate there was a negative wealth impact of social pressure: stock prices of firms announcing plans to stay in South Africa fared better relative to stock prices of firms announcing plans to leave.

JEL Classification: G12

Suggested Citation

Lytle, Laurian Casson and Joy, O. Maurice, The Stock Market Impact of Social Pressure: The South African Divestment Case. QUARTERLY REVIEW OF ECONOMICS AND FINANCE. Available at SSRN: https://ssrn.com/abstract=8174

Laurian Casson Lytle (Contact Author)

Firstar Investment Research and Management Company ( email )

777 E. Wisconsin Avenue
Suite 800
Milwaukee, WI 53202
United States
414-765-6484 (Phone)
414-765-4760 (Fax)

O. Maurice Joy

University of Kansas

1415
Lawrence, KS 66045
United States

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