Abstract
In this study, we explore how investors react to incidents of CEO sociopolitical activism. Drawing from the business case logic and political psychology literature, we theorize that the perceived relevance and ideology of CEO comments, as well as the institutional context in which they were made determine investor reactions. Our analysis of 379 CEO comments made between 2007–2020 indicates that investors react positively to CEOs’ political comments and negatively to sociocultural ones. Specifically, political comments are received favorably by investors if they are conservative-leaning, and this is especially true when made by CEOs of firms with greater government dependence or those operating in highly regulated industries. Conversely, investors react negatively to social comments made by CEOs of highly regulated firms. Overall, this study addresses recent calls for research on the expanding role of executives by highlighting the complex reactions CEO sociopolitical activism engenders among capital market stakeholders.
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