Understanding CEO Activism: Initial Insights and Future Research Directions

The rapidly growing practice of CEOs taking public stances on social, environmental, and political issues (hereafter, CEO activism) has led to increased attention to the topic by practitioners and academic researchers. This paper provides an overview of the determinants and value implications of CEO activism, as well as of the mechanisms that could explain the value effects. The initial insights suggest that CEO activism can be prompted by both personal and strategic reasons, though studies disagree on which motive dominates. In terms of value implications, empirical evidence has shown support for both positive and negative value effects. However, the newest papers employing broader samples of activism events suggest that the overall effect is positive. Studies have identified significant, though at times conflicting, customer, employee, and investor responses as mechanisms that link CEO activism to firm value. More research is needed to address the empirical challenges associated with measuring CEO activism, determining the boundary conditions for value implications, and identifying its causal effects. Furthermore, new questions continue to arise as CEO activism evolves and as new social, environmental, and political issues command the attention of CEOs and their stakeholders.