A House Divided: A Study of Heterogenous Employee Reactions to ESG Misdeeds
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Strategy & Business Policy
Speaker: Sekou Bermiss
Associate Professor - UNC Kenan-Flagler
Conference Jouy-en-Josas T017
Abstract
In the domain of corporate social responsibility, environmental, social, and governance (ESG) performance is a critical factor influencing stakeholder perceptions. While extant research has provided valuable insights, it has largely treated stakeholders as a homogeneous group. This study addresses this gap by examining how the relationship between ESG performance and stakeholder perceptions is contingent upon audience heterogeneity. Specifically, we focus on employee responses to negative ESG events. We propose that employees process ESG information and perceive the firm's societal role differently based on the external influences they experienced during their formative years (e.g., economic climate, social movements). Consequently, we hypothesize that generational differences moderate employee reactions to employer ESG transgressions. Furthermore, we posit that firm-specific socialization (i.e., employee tenure) may act as a moderator of the generational effect. We test our theory using a longitudinal event-study design with a sample constructed from Glassdoor, RepRisk, and Compustat data. Our findings provide general support for the proposed hypotheses.