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Stakeholders have long pressured firms to provide societal benefits in addition to generating shareholder wealth. Such benefits have traditionally come in the form of corporate social responsibility. However, many stakeholders now expect firms to demonstrate their values by expressing public support for or opposition to one side of a partisan sociopolitical issue, a phenomenon the authors call “corporate sociopolitical activism” (CSA). Such activities differ from commonly favored corporate social responsibility and have the potential to both strengthen and sever stakeholder relationships, thus making their impact on firm value uncertain. Using signaling and screening theories, the authors analyze 293 CSA events initiated by 149 firms across 39 industries, and find that, on average, CSA elicits an adverse reaction from investors. Investors evaluate CSA as a signal of a firm’s allocation of resources away from profit-oriented objectives and toward a risky activity with uncertain outcomes. The authors further identify two sets of moderators: (1) CSA’s deviation from key stakeholders’ values and brand image and (2) characteristics of CSA’s resource implementation, which affect investor and customer responses. The findings provide new and important implications for marketing theory and practice.

What can be done to combat political misinformation? One prominent intervention involves attaching warnings to headlines of news stories that have been disputed by third-party fact-checkers. Here we demonstrate a hitherto unappreciated potential consequence of such a warning: an implied truth effect , whereby false headlines that fail to get tagged are considered validated and thus are seen as more accurate. With a formal model, we demonstrate that Bayesian belief updating can lead to such an implied truth effect. In Study 1 ( n = 5,271 MTurkers), we find that although warnings do lead to a modest reduction in perceived accuracy of false headlines relative to a control condition (particularly for politically concordant headlines), we also observed the hypothesized implied truth effect: the presence of warnings caused untagged headlines to be seen as more accurate than in the control. In Study 2 ( n = 1,568 MTurkers), we find the same effects in the context of decisions about which headlines to consider sharing on social media. We also find that attaching verifications to some true headlines—which removes the ambiguity about whether untagged headlines have not been checked or have been verified—eliminates, and in fact slightly reverses, the implied truth effect. Together these results contest theories of motivated reasoning while identifying a potential challenge for the policy of using warning tags to fight misinformation—a challenge that is particularly concerning given that it is much easier to produce misinformation than it is to debunk it. This paper was accepted by Elke Weber, judgment and decision making.

We investigate whether environmental, social, and governance (ESG) ratings predict future ESG news and the associated market reactions. We find that the consensus rating predicts future news, but its predictive ability diminishes for firms with large disagreement between raters. The relation between news and market reaction is moderated by the consensus rating. In the presence of high disagreement between raters, the relation between news and market reactions weakens, while the rating with the most predictive power predicts future stock returns. Overall, while rating disagreement hinders the incorporation of value-relevant ESG news into prices, ratings predict future news and proxy for market expectations of future news.

The first issue of the year is an occasion for the co-editors of Strategic Organization to present our annual awards, and make other announcements about ongoing and future special issues, as well as general information on the progress of the journal. Strategic Organization publishes conceptual and empirical articles at the intersection of the fields of strategy and organization theory. Empirical articles may draw, of course, on a wide variety of methods, ranging from experiments and simulations to archival studies and surveys to qualitative research. The current issue of the journal focuses specifically on qualitative studies with two empirical articles and a special So!apbox Forum on ‘Navigating the Tensions of Quality in Qualitative Research’. This set of six essays offers a wonderful resource for qualitative researchers. Entirely coincidentally, the two award-winning papers for 2021 announced next are also highly relevant to the theme of qualitative research, confirming the leadership of Strategic Organization in this area, as well as the potential for qualitative research to contribute significantly to the field.

This paper studies how changes in oil supply expectations affect the oil price and the macroeconomy. Using a novel identification design, exploiting institutional features of OPEC and high-frequency data, I identify an oil supply news shock. These shocks have statistically and economically significant effects. Negative news leads to an immediate increase in oil prices, a gradual fall in oil production, and an increase in inventories. This has consequences for the US economy: activity falls, prices and inflation expectations rise, and the dollar depreciates, providing evidence for a strong channel operating through supply expectations.

Central bank announcements simultaneously convey information about monetary policy and the central bank's assessment of the economic outlook. This paper disentangles these two components and studies their effect on the economy using a structural vector autoregression. It relies on the information inherent in high-frequency co-movement of interest rates and stock prices around policy announcements: a surprise policy tightening raises interest rates and reduces stock prices, while the complementary positive central bank information shock raises both. These two shocks have intuitive and very different effects on the economy. Ignoring the central bank information shocks biases the inference on monetary policy nonneutrality.

What moves stock prices? Prior literature concludes that the revelation of private information through trading, and not public news, is the primary driver. We revisit the question by using textual analysis to identify fundamental information in news. We find that this information accounts for 49.6% of overnight idiosyncratic volatility (vs. 12.4% during trading hours), with a considerable fraction due to days with multiple news types. We use our measure of public information arrival to reinvestigate two important contributions in the literature related to individual R² s of stock returns on aggregate factors.

Research summary: Building on the communications and linguistics literatures, we explore the language attributes managers use in interactions with investors and the subsequent reactions of investors. Specifically, we hypothesize that top managers' use of concrete language attributes in communication with investors broadly associates with positive investor reactions. We further posit that this relationship will be moderated by the level of firm risk. Our results support our hypotheses and, thus, offer important insights to the impression management literature. First, subtle elements of managerial communication can have significant impression management consequences. More specifically, language concreteness is a key language attribute that generally induces positive investor responses. Finally, the effectiveness of language concreteness is conditional on the informational environment of the firm. Managerial summary: How can managers communicate in a way that presents the firm more positively or reduces the negativity associated with perceived firm risks? Our findings indicate that choosing appropriate persuasive language features in interactions with investors can help a firm manage its impressions. Specifically, we find that top managers' use of concrete language that provides details and specific information in communication with investors, in general, garners positive investor reactions. Further, the effectiveness of top managers' use of concrete language depends on investor concerns. More specifically, we find that when a firm is seen as having a riskier profile, using concrete language helps induce a more positive investor response; while when a firm is seen as low risk, using abstract language may be more beneficial.

We investigate, in a theoretical framework, the joint role played by investors' attention to news and learning uncertainty in determining asset prices. The model provides two main predictions. First, stock return variance and risk premia increase with both attention and uncertainty. Second, this increasing relationship is quadratic. We empirically test these two predictions, and we show that the data lend support to the increasing relationship. The evidence for a quadratic relationship is mixed. Overall, our study shows theoretically and empirically that both attention and uncertainty are key determinants of asset prices.