A new study led by Sarah Soule, professor of sociology at Cornell, and Brayden King, assistant professor of sociology at Brigham Young University, examines how organized public protest affects "abnormal stock price returns" -- an indicator of investor reaction to a focal event. The report, "Social Movements as Extra-institutional Entrepreneurs: The Effect of Protest on Stock Price Returns," is published in the September 2007 issue of Administrative Science Quarterly.
Among the findings: Protests are more influential when they target issues dealing with critical stakeholder groups -- shareholders, for instance -- or when generating greater media coverage. Also, corporate targets are less vulnerable to protest when the media has given substantial coverage to the firm prior to a protest.
The study uses data from 342 protests between 1962 and 1990, as reported in The New York Times. The reliance on a single media source makes sense, Soule said, given that "there is a long history of using The New York Times for data on protest in the U.S., and [it] has been called the 'gold standard'" for such information. Nonetheless, the authors conducted extensive reliability and validity checks using The Wall Street Journal and The Washington Post as alternative sources.
"Because the major financial exchanges in the U.S. are located in New York City, the Times is ideally positioned to cover protests of business corporations," she said. "[However] we do not assume that this is necessarily the source of information used by investors."
The researchers found that protests related to labor or consumer issues provoke a more negative reaction from investors and, perhaps more obviously, that protests with greater levels of media coverage provoke a stronger negative reaction by investors. In fact, media coverage had far more influence on investor behavior than the actual size of the protest itself, the study showed. However, the study showed that prior media coverage of a firm mitigated the influence of a protest because it "provides alternative information to investors that may contradict the messages broadcast by protestors."
Protests by the National Gay and Lesbian Task Force against Cracker Barrel's disastrous 1991 policy to dismiss all gay and lesbian employees, for example, resulted in a national boycott of the chain. The company's stock fell 26 percent below the expected return -- in one month -- even though national sales remained stable. Although Cracker Barrel officials retracted the policy, shareholders forced the company to adopt a nondiscrimination policy regarding same-sex orientation.
In the 1960s, Dow Chemical's stock took a beating when investors organized a protest against its production of napalm; protests against discriminatory hiring policies at Eastman Kodak in the late-1960s hurt the Rochester-based company and forced change.
"Many activists feel that their actions have little or no effect on what corporations do," said Soule. "To the extent that corporations care about their stock price, it seems important to emphasize that social movement activity -- for example, protest -- can affect stock price."
Soule, who recently joined the Cornell faculty, is an expert on social movements theory and methodology. She spent much of the past 10 years examining the impact of social movements on state policy. She is bringing her expertise to the fore as a fellow with the Contentious Knowledge theme project, sponsored by the Cornell Institute for the Social Sciences.
Press Relations Office | EurekAlert!
New study: How does Europe become a leading player for software and IT services?
03.04.2017 | Fraunhofer-Institut für System- und Innovationsforschung (ISI)
Reusable carbon nanotubes could be the water filter of the future, says RIT study
30.03.2017 | Rochester Institute of Technology
Staphylococcus aureus is a feared pathogen (MRSA, multi-resistant S. aureus) due to frequent resistances against many antibiotics, especially in hospital infections. Researchers at the Paul-Ehrlich-Institut have identified immunological processes that prevent a successful immune response directed against the pathogenic agent. The delivery of bacterial proteins with RNA adjuvant or messenger RNA (mRNA) into immune cells allows the re-direction of the immune response towards an active defense against S. aureus. This could be of significant importance for the development of an effective vaccine. PLOS Pathogens has published these research results online on 25 May 2017.
Staphylococcus aureus (S. aureus) is a bacterium that colonizes by far more than half of the skin and the mucosa of adults, usually without causing infections....
Physicists from the University of Würzburg are capable of generating identical looking single light particles at the push of a button. Two new studies now demonstrate the potential this method holds.
The quantum computer has fuelled the imagination of scientists for decades: It is based on fundamentally different phenomena than a conventional computer....
An international team of physicists has monitored the scattering behaviour of electrons in a non-conducting material in real-time. Their insights could be beneficial for radiotherapy.
We can refer to electrons in non-conducting materials as ‘sluggish’. Typically, they remain fixed in a location, deep inside an atomic composite. It is hence...
Two-dimensional magnetic structures are regarded as a promising material for new types of data storage, since the magnetic properties of individual molecular building blocks can be investigated and modified. For the first time, researchers have now produced a wafer-thin ferrimagnet, in which molecules with different magnetic centers arrange themselves on a gold surface to form a checkerboard pattern. Scientists at the Swiss Nanoscience Institute at the University of Basel and the Paul Scherrer Institute published their findings in the journal Nature Communications.
Ferrimagnets are composed of two centers which are magnetized at different strengths and point in opposing directions. Two-dimensional, quasi-flat ferrimagnets...
An Australian-Chinese research team has created the world's thinnest hologram, paving the way towards the integration of 3D holography into everyday...
24.05.2017 | Event News
23.05.2017 | Event News
22.05.2017 | Event News
26.05.2017 | Life Sciences
26.05.2017 | Life Sciences
26.05.2017 | Physics and Astronomy