Session 42

The Word is Out! Stakeholder Responses to Public Signals of Firms' Behaviors

Track M

Date: Monday, October 5, 2015

Track X

Time: 16:45 – 18:00

Common Ground

Room: Plaza Court 5


  • Rhonda Reger, University of Tennessee

Title: Customer Reactions and Analyst Stock Recommendations: Evidence from S&P 500 Electric Power Companies’ Twitter Accounts


  • Eun-Hee Kim, George Washington University
  • Yoona Youm, George Washington University

Abstract: The importance of firm-stakeholder relationships is gaining increasing attention. Although a theory of the drivers and consequences of stakeholder pressure has been developing, it focuses on pressures from organized stakeholders such as shareholders, non-governmental organizations and activists and does not incorporate the emerging possibility that individual voices such as customer voices may matter. By exploring firm-stakeholder relationships in the social media space, where customers can provide immediate feedback on firm initiatives to address their concerns and needs, we demonstrate the importance of taking into account stakeholder reactions in evaluating the link between firm-stakeholder relationships and firm performance. We find that customers’ favorable reactions to firm initiatives in the social media space have a significant impact on analyst stock recommendations, particularly percentage buy recommendations, if the opinions of customers matter for firm performance.

Title: Do Shareholders Respond to Information Security Breaches: An Attributional Model


  • Xinran Wang, University of Tennessee
  • T. Russell Crook, University of Tennessee
  • Timothy Munyon, University of Tennessee

Abstract: Information security breaches – such as hacking into a firm’s databases – occur every day, and these incidents have become more widely reported by the media. We integrate insights from resource-based and attribution theories to understand the relationship between firms’ information security breaches and stock market reactions. We assert that, although shareholders generally react negatively to these incidents, reactions are more significant when shareholders attribute the causes of data breaches to internal, controllable, and stable factors. We investigate 262 data breach incidents of US firms from 2005 to 2013. The findings show that stock market returns drop when incidents were announced. Moreover, shareholders reacted more strongly when the incidents might have been shaped by inefficient governance controls and multiple lapses during a close time proximity.

Title: Signaling is a Two-Way Street: Response to Media Disapproval of Overpaid CEOs at Philanthropy-Inclined Firms


  • Georg Wernicke, Copenhagen Business School
  • Jean-Philippe Vergne, University of Western Ontario
  • Steffen Brenner, Copenhagen Business School

Abstract: This paper draws on the signaling and infomediary literatures to explain the antecedents and consequences of media disapproval faced by overpaid CEOs. Firstly, we argue that the media are reliable interpreters of firm signals, and in turn produce accurate signals about firms. Accordingly, we find that the media target CEOs who are overpaid relative to their performance and comparable peers. We further argue that signal incongruence explains variance in disapproval levels across firms offering comparable pay packages. Specifically, we theorize and demonstrate that a signal of altruism (philanthropy) amplifies the negative effect of a signal of selfishness (excess CEO pay) as it confuses audiences and feeds suspicion. Finally, we argue that signaling is a two-way street and find that firms respond to media disapproval by reducing excess CEO pay.

Title: Silence versus Diffusion: An Evolution from Social Media Grievances to Social Movements


  • Xinran Wang, University of Tennessee
  • Rhonda Reger, University of Tennessee

Abstract: How and why do some initial grievances posted on social media evolve into firm infamy and turn into social movements, but others die out quickly with seemingly no ill effects for the target firm? The management of firm reputation has become more complex with the advent of social media, which allows stakeholders to post and repost grievances against firms without any filtering by information intermediaries. We build new theory to address this new phenomenon by integrating theories from social psychology, sociology, and communications. Our theory suggests that the influences of an initial online grievances on firm infamy depends on the issue salience of the initial grievance. Moreover, the power of firm infamy promoting social movements depends on the rhetoric of responsiveness of the offending firms.

Title: The Good, the Bad, and the Mixed: Interactive Effects of Concurrent Signals on Receiver Response


  • Miles Zachary, West Virginia University
  • Jennifer Sexton, West Virginia University
  • Karen Nicholas, West Virginia University
  • G Tyge Payne, Texas Tech University

Abstract: This study explores the interactive nature of firm and stakeholder signals, and their subsequent effects on receiver response. We argue that signals sent by firms are embedded in a rich signaling environment in which external stakeholders with inside information can and do send concurrent signals that are likely to either enhance or mitigate a firm’s signal. Specifically, we examine how the scope of a film’s distribution by the studio-distributor signals confidence in the popular appeal of the film, and whether that signal is altered by the critical evaluations of film critics and expert audiences prior to the film’s release. In doing so, we intend to demonstrate the embeddedness of firm signals and how these signals are beholden to the signals from other stakeholders.

Title: Valuing Stakeholder Consent: The Financial Value of Community Benefits Agreements


  • Sinziana Dorobantu, New York University
  • Kate Odziemkowska, University of Pennsylvania

Abstract: This paper explores the financial value of contractual agreements between firms and local communities. While the business case for corporate social responsibility has a long history of study, considerably less is known about the financial value of specific strategies firms use to engage stakeholders on whom they depend on for critical resources. Focusing on an emergent phenomenon of formal contracting between firms and local communities, we evaluate the value of stakeholder support expressed through the signing of a community benefits agreement (CBA). CBAs provide a strong signal to investors of firm-stakeholder mutual agreement, reducing hold-up risks and increasing the option value of firm assets. We propose an event study examining investors’ reactions to public announcements of 255 community benefits agreements signed in Canada’s mining sector.

All Sessions in Track M...

Sun: 08:00 – 09:15
Session 49: Stakeholder Strategy and Corporate Growth
Sun: 09:45 – 11:00
Session 48: On Teaching CSR as a Strategic Management Topic
Sun: 11:15 – 12:30
Session 47: On the Emerging B Corp Phenomenon and the Future of Capitalism
Sun: 17:45 – 00:00
Session 322: Stakeholder Strategy Business Meeting
Mon: 08:00 – 09:15
Session 39: Who is a stakeholder?
Mon: 11:15 – 12:30
Session 34: New Explanations of Contextual Differences in CSR
Session 244: Legitimacy, Stakeholders, and Competition
Session 257: Explaining CSR: Internal Factors
Mon: 13:45 – 15:00
Session 37: Political Ties: Knots or Bows?
Mon: 16:45 – 18:00
Session 42: The Word is Out! Stakeholder Responses to Public Signals of Firms' Behaviors
Session 89: Integrating Theories of Stakeholders, Ownership, Governance and Boards
Tue: 08:00 – 09:15
Session 43: First Principles in Creating Value: Stakeholder Theory
Tue: 11:00 – 12:15
Session 260: CSR Challenges
Tue: 14:15 – 15:30
Session 44: What's New? Intersecting Stakeholders with Entrepreneurial Industries, Firms, and Organizational Forms
Tue: 15:45 – 17:00
Session 46: Accidents, Disasters, and Stakeholder Demands
Session 265: Performance Effects of CSR and Non Market Strategy
Tue: 17:30 – 18:45
Session 90: Stakeholder Strategies in Emerging Markets

All Sessions in Track X...

Sun: 08:00 – 09:15
Session 74: Open Strategy Workshops: Lessons Learned from Practising Strategizing
Sun: 09:45 – 11:00
Session 29: The Elephant in the Room: How public policy and institutions help drive innovation, entrepreneurship, and firm performance
Session 76: The evolution of the strategy as a profession and the field of strategy
Sun: 11:15 – 12:30
Session 12: Environmental Entrepreneurship: How and When do Entrepreneurs address Environmental Degradation?
Session 38: Big Game Hunting: Accessing and Interacting with Senior Executives for Empirical Research
Sun: 13:45 – 14:30
Session 307: Lifetime Achievement Award Recipient
Sun: 14:45 – 15:45
Session 7: New Frontiers in Technologies, Fields, and Business Models: Implications for Academic and Practice Knowledge Creation
Sun: 16:15 – 17:30
Session 61: The Institutional Level of Strategizing Activities
Session 261: Knowledge Creation and Sharing in Virtual Communities
Mon: 08:00 – 09:15
Session 72: External Influences: Audiences and Media
Session 126: Entry Mode & Cross-Border Acquisitions
Session 140: New Perspectives on the Outside Director Selection Process
Mon: 09:45 – 11:00
Session 8: Elevating our Understanding of Organizational Performance: Bridging the Frontiers of Business and Corporate Strategies
Mon: 11:15 – 12:30
Session 149: Management and Coordination of Multinationals
Session 220: Perspectives on CEO Compensation
Mon: 13:45 – 15:00
Session 16: Human Capital and Innovation
Session 37: Political Ties: Knots or Bows?
Session 63: Political and Material Aspects of Strategy Making
Session 97: Accelerators, corporate VCs and new venture creation
Session 258: Explainng CSR: External Factors
Mon: 15:15 – 16:15
Session 227: Mergers, Acquisitions and Divestitures: Reconfiguring Resource Bases for Value Creation and Growth
Session 308: Strategy Beyond the Firm: Creating and Capturing Value from External Resources
Session 310: When the Smoke Clears: The Emergence of the Cannabis Industry
Session 311: Theory Fragmentation in Strategic Management?
Session 312: Climate Change: Why and How Should Strategic Management Care?
Mon: 16:45 – 18:00
Session 42: The Word is Out! Stakeholder Responses to Public Signals of Firms' Behaviors
Session 112: Acquisitions - Before the Deal
Tue: 08:00 – 09:15
Session 309: Looking Good and Sounding Better: Impression Management by CEOs
Tue: 09:45 – 10:45
Session 9: Whatever Happened to Theory in Strategic Management?
Tue: 11:00 – 12:15
Session 70: CEO Characteristics: Microfoundations of Behavioral Strategy
Tue: 14:15 – 15:30
Session 116: Acquisitions - After the Deal
Tue: 15:45 – 17:00
Session 52: Entrepreneurial business models
Session 219: A Tough Crowd: Critical Examinations by Owners and Stakeholders
Session 262: Pioneering Knowledge
Tue: 17:30 – 18:45
Session 144: Board Structure: What Works Best?
Session 208: Internationalization Strategies and Performance

Strategic Management Society