The Stock market impact of social pressure: The South African divestment case

Using the South African divestment case, this study tests the hypothesis that social pressure affects stock returns. Both short-run (3-, 11-, and 77-day periods) and long-run (13-month periods) tests of stock returns surrounding U.S. corporate announcements of decisions to staf or leave, South Afric...

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Bibliographic Details
Published in:The Quarterly review of economics and finance 1996-12, Vol.36 (4), p.507-527
Main Authors: Lytle, Laurian Casson, Joy, O.Maurice
Format: Article
Language:English
Subjects:
Divestiture
Divestments
Economic aspects
Economic models
Economics
Foreign investments
Hypotheses
Impact analysis
Rates of return
Securities markets
Social aspects
Social pressure
Social responsibility
Socially responsible investments
Statistical analysis
Stock prices
Stock-exchange
Studies
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Summary:Using the South African divestment case, this study tests the hypothesis that social pressure affects stock returns. Both short-run (3-, 11-, and 77-day periods) and long-run (13-month periods) tests of stock returns surrounding U.S. corporate announcements of decisions to staf or leave, South Africa were performed. Tests of the impact of institutional portfolio managers to divest stocks of U.S. firms staying in South Africa were also performed. Results indicate there was a negative wealth impact of social pressure: stock prices of firms announcing plans to stay in South Africa fared better relative to stock prices affirms announcing plans to leave.
ISSN:1062-9769
1878-4259
DOI:10.1016/S1062-9769(96)90049-6