Preliminary Conference Programme

Growing evidence shows stakeholders, in contrast to conventional wisdom, may defend firms despite controversial conduct or turn against firms despite responsible behavior. To help explain these unexpected reactions and their implications for capital markets, we integrate cognitive psychology with expectation-confirmation theory. We argue that expectancy violations are revealed through stakeholders’ affective responses to corporate activity, which serve as credible signals of stakeholder reappraisal and provide investors with new information—effects that existing scholarship provides limited ability to observe directly. To test this, we introduce Cumulative Abnormal Media Sentiment (CAMS), a novel measure capturing abnormal changes in stakeholder sentiment relative to firm-specific expectations. We validate CAMS through a replication and extension of Caroline Flammer’s (2013) event study of media-reported environmental actions by U.S. public firms through 2024. We not only find that stronger sentiment shocks are associated with larger stock price reactions, but also how much weight investors give those signals depends on the reputational context an event implicates. The result is a pattern of market reactions that is conditional, asymmetric, and at times counterintuitive.

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.

Empirical research on corporate political lobbying has focused primarily on public firms, largely overlooking private firms and the role of ownership in shaping corporate political voice. We address this gap by bringing private firms into view, comparing public and private lobbying behavior and examining how ownership structures and investor heterogeneity influence which public policy issues firms engage with and on whose behalf corporate political activity is undertaken. We construct a novel dataset linking U.S. federal lobbying records to ownership information for public firms and the largest 20,000 private firms in the United States. While public firms lobby more on average, we find that private firms are active and meaningful participants, exhibiting lobbying behavior comparable to public firms at both the extensive and intensive margins. We further show that certain investors act as “political principals,” shaping firms’ lobbying priorities. Firms increase lobbying following the entry of particular investors; firms with more heterogeneous investor bases pursue broader issue portfolios; lobbying aligns more closely with that of commonly owned portfolio peers than with industry rivals; and distinct investor types are associated with different policy priorities. Together, these findings show how ownership and investor logics structure corporate political engagement and firms’ relationships with policymakers.

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.