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.

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.

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.

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.

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.

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.