Research Seminar
Responding to Shareholder-Led Social Activism at Peer Firms: Evidence from a Regression Discontinuity Design by Professor Zhiyan WU
| Date: | Mar 6 (Wed), 2024 10:30 am - 11:45 am |
| Time: | 10:30AM - 11:45AM |
| Venue: | 14-282 Lau Ming Wai Academic Building |
| Details: | This research extends the information-processing perspective of board decision-making by focusing on how boards adapt to social cues from peer firms. Drawing on social information processing theory, we propose that the actions of peer firms, especially their responses to shareholder-led social activism, serve as critical information sources. Specifically, we argue boards will interpret peer firms’ conformity to social activism as a signal of evolving norm of stakeholder-friendly decision-making, nudging them to follow the norm by appointing independent directors with nonprofit experience. The impact of these social cues is more pronounced when they originate from high-performing peer firms or those led by CEOs with liberal ideologies. Utilizing a regression discontinuity design and data from 1,542 U.S. public firms, our analysis provides strong empirical support for our hypotheses. This research highlights the vital yet understudied role of social information in guiding board adaptations. |
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