The Political CEO: An Event Study Comparing Consumer Attributions of CEO Behavior*

Abstract

Objective. We sought to establish a relationship between negative political behavior of key firm members and consumer evaluations of the firm through an attribution theories extension. Method. We sample and code approximately 1,500 Tweets surrounding Dan Cathy's political beliefs about marriage and Taco Bell's response to a lawsuit regarding beef. Results. Consumers are more likely to attribute a volitional event (CEO political disapproval) toward the firm than toward societal elements. However, consumers experienced a greater degree of negative affect following the situational than the volitional event. Conclusion. While none of the consumers who attributed this situation toward Taco Bell also communicated decisions to no longer return for Taco Bell products, approximately 15 percent of the consumers who attributed Dan Cathy's political beliefs toward Chick-fil-A communicated intentions to no longer return to Chick-fil-A. A firm operated by a political CEO could lose 15 percent of all its consumers.It is not uncommon for leaders in industry to also take the lead in politics. It is of little surprise when the media reports on chief executive officer (CEO) politics, such as a plea from Starbucks CEO, Howard Schultz, to cease political contributions (CBS News, 2011) or major contributions in support of gay marriage by Amazon CEO, Jeff Bezos (Bingham, 2012). While these examples seemingly have little to nothing to do with the product the CEO represents, this research asks the following question: Do consumers attribute negative media portrayals of industry leaders toward the product itself?Researchers are calling for more examination of changes in consumer trust after public scrutiny of a firm through new media outlets (e.g., Twitter) (Hennig-Thurau et al., 2010). Drawing from both attribution theory and the accessibility-diagnosticity framework, we contend that consumers will attribute negative, controversial CEO political behavior, even if unrelated to firm operations, toward the firm, creating a spill-over effect. As an attempt to answer these research questions, social media posts surrounding two cases of negative media portrayal of CEO behaviors, one surrounding politics (i.e., Chick-fil-A) and one surrounding products (i.e., Taco Bell), are analyzed with special attention to consumer attribution. Thus, the objective of this research is to compare and contrast both the consumer attribution process and firm consequences of volitional and situational events.There is an abundance of research that examines CEO leadership style and/or personality (e.

What does corporate social advocacy signal? Evidence from boycott participation decisions

“…With respect to the event study analysis, we observe that a company's stock price gains a statistically significant abnormal return of 2.68% in the four days immediately following news of its support for the campaign, which suggests that market participants positively viewed the decision to join the campaign. This finding corroborates those of Dodd and Supa (2014, 2015), Mikeska and Harvey (2015) and Chatterji and Toffel (2019), who found that corporate stances on social issues significantly impact financial performance, as measured by consumer purchase intention.…”

“…That is, a commitment to actively engage and align with social causes that affect a broader group of stakeholders can improve financial performance. For example, CSA efforts can positively impact financial performance through consumers' purchasing intent, altruistic values and positive brand perception, all of which may increase the likelihood of consumers choosing the products of businesses that share their values (Dodd and Supa, 2014; Mikeska and Harvey, 2015; Chatterji and Toffel, 2019; Park and Jiang, 2020) [5]. Promoting values that they care about may also help firms to attract employees who are more motivated to perform, in part because of the opportunity to contribute to substantial social change.…”

“…Their study, which focused on corporations that had taken public stances on issues such as health care reform, emergency contraception and same-sex marriage, concludes that CSA for these issues significantly impacts consumer purchasing intention and brand perception and, therefore, affects the likelihood of consumers choosing the products of businesses that share their views. Similarly, Mikeska and Harvey (2015) and Chatterji and Toffel (2019) document evidence of changes in consumer purchasing intention towards the product a CEO represents after that CEO makes public their social and political beliefs on climate change, human rights and same-sex marriage. Park and Jiang (2020), using online surveys, find that CSA engagement affects the way individuals in the social media environment view a corporation as well as their loyalty to the brand the corporation represents.…”

“…Previous studies have mainly used consumer purchasing intent and brand loyalty as proxy for financial performance, and employed mostly survey or social media data (e.g. Dodd and Supa, 2014, 2015; Mikeska and Harvey, 2015; Chatterji and Toffel, 2019; Park and Jiang, 2020) [3]. The present study extends the empirical literature by taking a stock market perspective, and using stock returns as a measure of firm financial performance, to better understand values/identity signalling within the context of CSA actions [4].…”

Assessing the Impact of CEO Activism

“…Although numerous studies have examined corporate campaign contributions (e.g., Ansolabehere, Figueiredo, & Snyder, 2003), lobbying (e.g., Hillman, Keim, & Schuler, 2004), and CSR (e.g., Margolis & Walsh, 2003), we know of no research that has directly explored CEO activism, although two recent studies found that consumers’ willingness to buy products and services might be affected by whether they support the political and social stances associated with the firm (Dodd & Supa, 2014; Mikeska & Harvey, 2015). Our study focuses on the role of individual leaders and not only examines the influence of CEO activism on purchasing intent, but also compares the influence that business and political leaders’ social statements have on public opinion on a given issue.…”