Strategic CEO Activism in Polarized Markets

Swarnodeep Homroy and Shubhashis Gangopadhyay

Journal of Financial and Quantitative Analysis, 2025, vol. 60, issue 2, 617-657

Abstract: In this article, we show that statements of U.S. CEOs on contentious social issues are not necessarily an expression of their political views. Republican-donor CEOs are three times more likely to make social statements with a liberal slant. CEO activism is more likely if firms’ operating environment is politically polarized and employees are Democrat-leaning. Such statements are associated with a 3% increase in consumer visits to a firm’s Democrat County stores without significantly reducing them in Republican counties. CEO activism is associated with a 0.12% gain in firm value, increased quarterly sales, and a reduced likelihood of shareholder activism on social issues.

Date: 2025
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