A useful study comes out of the University of Arizona on the impact of corporate activism on the bottom line. It was published by the Journal of Marketing by its co-author Nooshin Warren, assistant professor of marketing in the University of Arizona Eller College of Management. The authors found that corporate activism has significant effects on firm value and the stock market performance, depending on how the activism aligns with the views of a firm's customers, employees and state regulators. The methodology is below.

Financial Impact: The researchers found if a company's action was misaligned with its key stakeholders, the company's stock market value decreased 2.45% compared to market expectations, as established by the Center for Research in Security Prices. If aligned with their stakeholders values, stock prices increased by .71%. Thus, the effects of misalignment are considerably worse than the upside of alignment when it comes to investors. A misstep can cause financial harm and therefore must be guarded against.

Sales Growth: As long as the activism event is in line with consumers' political values, the company's quarterly and annual sales grow after the activism. When activism is highly deviated from customers and the government, sales growth suffers. This is especially true when activism highly deviates from all three key stakeholders, which resulted in a sales decline of 4%.

It is terrific to have some metrics about the impact of corporate activism on the bottom line and sales growth. It clearly pays to be aligned with your stakeholders. It would have been helpful to also learn whether employees felt more or less loyal depending on their company’s stance. Warren advises staying authentic to your values because everyone is watching today. I think that companies need to be constantly monitoring what their employees, investors, customers and suppliers are thinking when it comes to corporate or CEO activism. Being tone deaf or silent can cause a lot more harm than one would expect. There are several examples of companies whose reputations have been dinged because they did not take their employees into account during the pandemic. You don’t want to be one of them.

Methodology: The researchers examined a dataset of 293 instances of corporate activism between January 2011 and October 2016 by 149 firms throughout the United States based on the Pew Research Center's 2014 Political Polarization in the American Public report and Political Polarization and Typology Survey. Researchers surveyed 1,406 people and asked them to label each corporate activism event on a scale from "very liberal" to "very conservative." A second survey of 375 people helped researchers identify a given company's typical customers as having more liberal or conservative views. Political leanings were gathered of company employees through political contribution data from the U.S. Federal Election Commission. The researchers then looked at the political composition of the legislature of the state where each firm is headquartered.