WHY ACTIVIST HEDGE FUNDS TARGET SOCIALLY RESPONSIBLE FIRMS: THE REACTION COSTS OF SIGNALING CORPORATE SOCIAL RESPONSIBILITY

• 成果类型: Article
• 署名作者: DesJardine, Mark R.; Marti, Emilio; Durand, Rodolphe
• 署名单位: Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park; Erasmus University Rotterdam; Erasmus University Rotterdam - Excl Erasmus MC; Hautes Etudes Commerciales (HEC) Paris
• 刊物名称: ACADEMY OF MANAGEMENT JOURNAL
• ISSN/ISSBN: 0001-4273
• DOI: 10.5465/amj.2019.0238
• 发表日期: 2021
• 页码: 851-872
• 关键词: STRATEGIC MANAGEMENT RESEARCH; SHAREHOLDER ACTIVISM; instrumental variables; governance; certification; INFORMATION; IMPACT; sustainability; philanthropy; capabilities

摘要

We develop and test a theory of how unintended audiences create reaction costs for firms that use corporate social responsibility (CSR) as a signal. We introduce and define reaction costs as costs that signal senders incur when unintended audiences react negatively to a true signal that was intended for another audience. We argue that activist hedge funds-an unintended audience-treat CSR as a signal that firms have wasteful intentions and capabilities, which prevent firms from maximizing shareholder value in the short term. On that basis, we hypothesize that activist hedge funds are more likely to target firms with higher levels of CSR, thus imposing reaction costs on these firms. We further argue that this relationship is weaker when firms operate in industries with high levels of CSR, and stronger when firms' financial communication is vague. Using data on activist hedge fund campaigns in the U.S. between 2000 and 2016, we find supporting results. Our study shows that CSR signals may be costlier than previously assumed and contributes to research on CSR, signaling, and corporate governance.