Management Papers

Document Type

Journal Article

Date of this Version

12-2014

Publication Source

Strategic Management Journal

Volume

35

Issue

12

Start Page

1727

Last Page

1748

DOI

10.1002/smj.2180

Abstract

We provide direct empirical evidence in support of instrumental stakeholder theory's argument that increasing stakeholder support enhances the financial valuation of a firm, holding constant the objective valuation of the physical assets under its control. We undertake this analysis using panel data on 26 gold mines owned by 19 publicly traded firms over the period 1993–2008. We code over 50,000 stakeholder events from media reports to develop an index of the degree of stakeholder conflict/cooperation for these mines. By incorporating this index in a market capitalization analysis, we reduce the discount placed by financial markets on the net present value of the physical assets controlled by these firms from 72 percent to between 37 and 13 percent.

Copyright/Permission Statement

This is the peer reviewed version of the following article: Henisz, W. J., Dorobantu, S. and Nartey, L. J. (2014), Spinning gold: The financial returns to stakeholder engagement. Strat. Mgmt. J., 35: 1727–1748., which has been published in final form at doi: 10.1002/smj.2180. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving http://olabout.wiley.com/WileyCDA/Section/id-820227.html#terms.

Keywords

political risk, instrumental stakeholder theory, corporate social responsibility, international business, shareholder value

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Date Posted: 27 November 2017

This document has been peer reviewed.