When Risk Management and Stakeholder Management Collide: A Financial Analysts Perspective

Abstract

Two of the popular lenses in examining corporate environmental strategy are 1) the risk management perspective and 2) the stakeholder management perspective. Although the risk management perspective suggests that the two views are complementary—better managed firm-stakeholder relationships can serve as a buffer in times of difficulty, i.e., as a risk management tool, we argue that the risk management perspective can be at odds with the stakeholder management perspective when potential stakeholder synergy is low. Under such circumstances, well-received environmental sustainability effort by stakeholders (in particular, costly initiatives) may be considered a waste of resources and thus viewed negatively by financial analysts. By employing stakeholder receptivity to corporate environmental strategy demonstrated in corporate Twitter accounts, we find support for this argument. We further find that analyst perception and judgment about the potential costliness of environmental initiatives moderate this relationship.