Conference Programme

Conventional accounts expect stakeholder and investor responses to track corporate conduct valence, with responsible actions generating positive responses and irresponsible actions negative responses. We challenge this by integrating expectation-confirmation theory with cognitive psychology to argue that sentiment shocks—abnormal deviations in stakeholder affect relative to firm-specific expectations—are the operative investor signal. While expectancy-confirming events are financially muted, violations prompt reappraisal. We introduce Cumulative Abnormal Media Sentiment (CAMS), a firm-specific sentiment shock measure analogous to Cumulative Abnormal Returns, validated by replicating and extending Flammer’s (2013) environmental event study through 2024. We find that sentiment shocks predict stock price reactions, but the weight investors assign is conditional on environmental reputation: shocks carry inconsistent weight where reputation creates interpretive ambiguity, and differentiated responses where it does not.

We study whether industrial plants exploit wildfire smoke episodes as cover to increase emissions. Using a difference-in-differences approach, we find that relative to air quality monitors without proximate industrial plants, those located near industrial plants record a significantly larger increase in SO₂ concentrations from non-smoke to smoke days, consistent with plants strategically timing emissions to coincide with wildfire smoke. At the same time, satellite-based thermal infrared radiation indicates intensified plant activity, pointing to opportunistic increases in production rather than coincidental factors. The emission response to wildfire smoke vanishes on weekends and holidays but is stronger among plants with more flexible production capacity or operating in financially distressed industries, reinforcing the role of deliberate operational choices under economic incentives. Moreover, the extent of the response is affected by local regulatory monitoring, suggesting that enforcement capacities moderate firms’ incentives to pollute strategically. Overall, our findings reveal that wildfires not only degrade air quality directly but also create opportunities for industrial polluters to conceal emissions, underscoring the need for regulatory frameworks that anticipate and deter such opportunistic behavior.

Do investors shape what firms lobby on? Investors holding stakes across multiple firms face a distinctive policy challenge: regulatory outcomes affect them at the portfolio level, not just at the level of any individual firm. Research on corporate political activity has largely focused on firm-specific drivers, with less empirical attention to whether and how investor-owners shape political priorities. Drawing on research showing that investors influence portfolio firms' strategic behavior through governance, signaling, and engagement, we argue that common owners align portfolio firms' lobbying because portfolio-level policy influence produces gains no single firm could capture. Consistent with this argument, we find that common ownership is positively associated with lobbying similarity between firms. The effect is amplified for firm pairs in highly regulated industries, and common ownership also raises the overall intensity of political engagement. Distinct investor types are associated with distinct issue emphases: venture capital and angel investors with environmental lobbying, hedge funds with tax lobbying, and private equity with innovation and intellectual-property lobbying. We use mergers between investors as a quasi-exogenous shock to rule out alternative explanations. Our study contributes to literatures on corporate political activity and common ownership and brings private firms into focus as politically consequential actors.

Corporate political activity (CPA) is a central nonmarket strategy, yet its benefits are often assessed through firm performance outcomes that yield mixed evidence. We reconceptualize CPA as institutionally contingent insurance against social accountability. Drawing on new institutional economics, we argue that CPA’s core value lies less in shaping how rules are enforced: political engagement can expand access and increase the likelihood of regulatory leniency. This insurance logic creates a moral-hazard dynamic – by lowering expected enforcement costs in socially consequential domains, CPA can weaken deterrence and increase firms’ propensity to engage in corporate social irresponsibility (CSI). We further theorize two institutional contingencies that impact the ability of connected political actors to supply forbearance: political homogeneity, which expands the capacity for discretionary enforcement; and institutional disruption, which and reorders institutional salience and destabilizes enforcement expectations. Analyses of U.S. firms in the 2011–2020 period are consistent with these arguments, showing a positive association between CPA and CSI that strengthens under homogeneity, and attenuates during disruption. By shifting attention from market outcomes to enforcement and accountability, this study reframes CPA as a socially consequential strategy and clarifies how institutional context conditions its effects.

This question-driven research refines decoupling theory by disaggregating policy and practice into analytically-distinct components, each of which can be symbolic, moderate or substantive. Applying this framework to the context of corporate decarbonization, we uncover meaningful variation in the ways firms adopt climate policies and implement emissions-reduction practices, highlighting multiple distinct configurations—symbolic and moderate coupling, reverse decoupling, and substantive alignment—that have received limited attention in the literature. To do this, we pioneer an empirical approach for identifying whether practices are symbolic or substantive, based on the tradeoffs firms made when choosing to pursue certain decarbonization initiatives over others. By developing more precise conceptual and empirical tools, this study offers a roadmap for evaluating (de)coupling in domains marked by institutional complexity and strategic tradeoffs.