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Employee responses to CEO activism

Author

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  • Anahit Mkrtchyan,
  • Sandvik, Jason
  • Xu, Da

Abstract

We examine employee responses to CEO activism, the increasingly common practice of CEOs taking public stances on socio-political issues. CEO activism may bolster employees' identification with their organizations and strengthen shared beliefs among employees. Alternatively, CEO activism may alienate employees if CEO stances contrast with employees' ideologies. We find that employee satisfaction is higher when CEOs engage in activism that is aligned with employees’ ideologies. Furthermore, firms with CEO activism experience a net inflow of productive, ideologically-aligned inventors, which contributes to increased firm-level innovation. The improvements in employee satisfaction and innovation constitute an important channel that connects aligned CEO activism to increased firm value.

Suggested Citation

  • Anahit Mkrtchyan, & Sandvik, Jason & Xu, Da, 2024. "Employee responses to CEO activism," Journal of Accounting and Economics, Elsevier, vol. 78(1).
    • Handle: RePEc:eee:jaecon:v:78:y:2024:i:1:s0165410124000314
    DOI: 10.1016/j.jacceco.2024.101701
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    More about this item

    Keywords

    CEO activism; Employee satisfaction; Innovation; Human capital; Corporate culture; Diversity washing;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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