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Available. Open Access. Open Access
Article
Publication date: 27 June 2022

Pyemo N. Afego, Dahiru A. Bala Abdullahi, Bashir Tijjani and Imhotep Paul Alagidede

This paper operationalizes insecurity and governance crises to study their effects on stock market response to two political events in Nigeria – the 2015 and 2019 presidential…

1745

Abstract

Purpose

This paper operationalizes insecurity and governance crises to study their effects on stock market response to two political events in Nigeria – the 2015 and 2019 presidential elections.

Design/methodology/approach

An event study was used to capture the market responses. Abnormal returns at the aggregate and sectoral levels were measured over several time windows before and after the respective election results were announced.

Findings

The market reacted strongly positively to a change in presidency from an incumbent to an opposition party candidate in the 2015 election but weakly positively, at best, to the re-election of the incumbent candidate in the 2019 election. In addition, banking stocks exhibited greater sensitivity to these events than oil and gas stocks.

Research limitations/implications

There may be peculiarities with the Nigerian case and with the two elections analyzed. Therefore, future research could focus on understanding the extent to which the results generalize to the broader sub-Saharan context and other regions that face similar governance challenges.

Practical implications

Understanding that markets may have a different perception towards incumbent versus opposition candidate electoral victories during periods of insecurity and governance crisis is important for investors, policymakers, researchers and the wider society.

Originality/value

Past empirical studies on political events and stock returns in Sub-Saharan Africa contexts such as Nigeria ignore shifts in voter mood and produce contradictory findings. This paper helps to resolve some of these contradictions by providing insight into how the markets can have a different perception towards incumbent and opposition candidate electoral victories during periods of insecurity and governance crisis.

Details

African Journal of Economic and Management Studies, vol. 14 no. 1
Type: Research Article
ISSN: 2040-0705

Keywords

Available. Open Access. Open Access
Article
Publication date: 16 March 2021

Pyemo N. Afego and Imhotep P. Alagidede

This paper explores how a firm's public stand on a social-political issue can be a salient signal of the firm's values, identity and reputation. In particular, it investigates how…

8243

Abstract

Purpose

This paper explores how a firm's public stand on a social-political issue can be a salient signal of the firm's values, identity and reputation. In particular, it investigates how boycott participation–conceptualized as a cue of a corporation's stand on important social-political issues–may affect the stock market valuation of that corporation, as well as how corporations legitimise their stand on the issues.

Design/methodology/approach

The authors employ a mixed-methods design that uses both qualitative techniques (content analysis) and quantitative methods (event study methodology) to examine a sample of US firms who participated in a boycott campaign that sought to call attention to issues of hate speech, misinformation and discriminatory content on social media platform Facebook.

Findings

Findings from the qualitative content analysis of company statements show that firms legitimise their stand on, and participation in, the boycott by expressing altruistic values and suggesting to stakeholders that their stand aligns not only with organizational values/convictions but also with the greater social good. Importantly, the event study results show that firms who publicly announced their intention to participate in the boycott, on average, earn a statistically significant positive abnormal stock return of 2.68% in the four days immediately after their announcements.

Research limitations/implications

Findings relate to a specific case of a boycott campaign. Also, the sample size is limited and restricted to US stocks. The signalling value of corporate social advocacy actions may vary across countries due to institutional and cultural differences. Market reaction may also be different for issues that are more charged than the ones examined in this study. Therefore, future research might investigate other markets, use larger sample sizes and consider a broader range of social-political issues.

Practical implications

The presence of significant stock price changes for firms that publicly announced their decision to side with activists on the issue of hate propaganda and misinformation offers potentially valuable insights on the timing of trades for investors and arbitrageurs. Insights from the study also provide a practical resource that can be used to inform organizations' decision-making about such issues.

Social implications

Taking the lead to push on social-political issues, such as hate propaganda, discrimination, among others, and communicating their stands in a way that speaks to their values and identity, could be rewarding for companies.

Originality/value

This study provides novel evidence on the impact that corporate stances on important social-political issues can have on stock market valuation of firms and therefore extends the existing related research which until now has focused on the impact on consumer purchasing intent and brand loyalty.

Details

Journal of Capital Markets Studies, vol. 5 no. 1
Type: Research Article
ISSN: 2514-4774

Keywords

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Article
Publication date: 11 October 2021

Pyemo Afego and Imhotep Alagidede

The purpose of this study is to explore how citizen protests against perceived acts of racial injustice impact on share prices of companies who weigh in on the protests. In…

380

Abstract

Purpose

The purpose of this study is to explore how citizen protests against perceived acts of racial injustice impact on share prices of companies who weigh in on the protests. In particular, corporate statements that directly address the issues around the protests are identified and possible mechanisms underlying how these may impact shareholder value are discussed.

Design/methodology/approach

The authors first use a qualitative research approach of content and sentiment analysis to track how companies or their chief executive officers (CEOs) present their stance against racial injustice, as represented by their use of linguistic markers. Then, the authors use an event study methodology to assess the response from stock market participants.

Findings

The findings suggest that CEOs primarily convey their stance using language that is emotive and empathic. In addition, shareholders earn a significant abnormal return of 2.13%, on average, in the three days following the release of the statements.

Research limitations/implications

This study considered only US-listed companies. The sample size, also, is relatively small. Institutional and cultural differences across countries may also vary. Thus, future research could explore the extent to which the findings generalize to other contexts.

Practical implications

Results provide insights to top managers who communicate with various stakeholders on emotionally charged social issues. Findings also offer insights on the timing of trades for investors and arbitrageurs.

Social implications

Findings contribute to the understanding of corporate behaviour in times of social upheaval. Insights from the study may also be used to inform corporate communication decisions about important social issues.

Originality/value

This study brings into focus the role that affective appeal and moral emotion can play in evoking motivation for corporate activism, and the impact that this has on investor opinions’ formation process.

Details

Society and Business Review, vol. 17 no. 2
Type: Research Article
ISSN: 1746-5680

Keywords

Available. Content available
Article
Publication date: 30 March 2022

Debbie Haski-Leventhal

1033

Abstract

Details

Society and Business Review, vol. 17 no. 2
Type: Research Article
ISSN: 1746-5680

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