Corporate Support for Black Lives Matter: Determinants and Effects on Retail Investors

This study examines factors that influence corporate social activism (CSA) and the effects of such engagement on retail investor preferences using manually collected evidence of companies’ support for the Black Lives Matter campaign (BLM). We find that board diversity and the pressure of meeting social expectations are closely related to companies’ CSA initiatives. Furthermore, using the data on retail investor holdings from the Robinhood trading platform, we report that the number of retail investors holdings stocks in companies that spoke up in support of the BLM campaign increases by about 2 percent compared to that of nonspeaking up companies. The latter effect is stronger for smaller companies and companies with low ESG scores. We also find some evidence that speaking up is associated with an increase in firm value.