Social Movements as Extra-institutional Entrepreneurs: The Effect of Protests on Stock Price Returns

This paper uses social movement theory to examine one way in which secondary stakeholders outside the corporation may influence organizational processes, even if they are excluded from participating in legitimate channels of organizational change. Using data on activist protests of U.S. corporations during 1962-1990, we examine the effect of protests on abnormal stock price returns, an indicator of investors’ reactions to a focal event. Empirical analysis demonstrates that protests are more influential when they target issues dealing with critical stakeholder groups, such as labor or consumers, and when generating greater media coverage. Corporate targets are less vulnerable to protest when the media has given substantial coverage to the firm prior to the protest event. Past media attention provides alternative information to investors that may contradict the messages broadcast by protestors.