Social Activism and Firm Valuation: An Examination of ‘Taking a Knee’ Protests and National Football League Sponsors

We build upon social movement and investor attention theories to investigate the effect of “taking a knee†protests on the abnormal stock returns of NFL sponsoring companies. The study is conducted in two phases. Employing event study methodology in the first phase, we measured the abnormal returns and trading volumes of the companies during a four-year period from 2016 to 2020. While the results for abnormal returns are economically small, we found that there is 13.42% increase in trading volume in [0,+5], 61.28% in [0,+15], and 160.01% in [0,+30] event windows. There was also information leakage prior to the events as indicated by the 36.08 increase in trading volume in the [−30, −2] event window. We ran multiple regression models in the second phase to further examine the degree to which the unique circumstances surrounding the protests explain variations in abnormal returns. Companies that had higher brand values and the negative emotional tone of the comments made by the President of the United States about the protests were positively associated with abnormal returns. The results are also robust to methodological changes using abnormal returns adjusted for trading volume. Overall, the findings suggest that social activism by athletes is likely to affect investor attention and sentiment, thereby garnering a spillover effect on sponsoring companies’ stock prices and trading volumes.