Publication Type

Working Paper

Version

publishedVersion

Publication Date

12-2021

Abstract

We investigate why firms voluntarily disclose support for the Black Lives Matter movement (BLM firms) even though these disclosures have little impact on shareholder value. We examine two competing explanations: that managers are acting in the interests of a broad set of stakeholders, or that they are engaging in “woke-washing.” Our evidence supports the stakeholder perspective since we find that BLM firms have more inclusive cultures on multiple dimensions – from their board members, to employees, to the rights of shareholders, and to the compensation structure of top executives. Furthermore, BLM firms face less risk in speaking out since they are part of stakeholder networks that are more supportive of BLM. BLM firms have competitors that spoke out, share directors with other firms that spoke out, and are headquartered in communities that supported BLM. We develop an “inclusivity index” that classifies 68 percent of BLM firms as “authentic” and 18 percent as “woke-washing.” Out of sample tests verify that the inclusivity index is useful for predicting which firms speak out on other social causes.

Keywords

Black Lives Matter, Voluntary Disclosure, Corporate Culture, Social Responsibility

Discipline

Accounting | Business Law, Public Responsibility, and Ethics

Research Areas

Corporate Reporting and Disclosure

First Page

1

Last Page

65

Identifier

10.2139/ssrn.3921985

Publisher

SSRN

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.2139/ssrn.3921985

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