Protests Can Pierce a Company's Stock Prices


| 11/15/2007 5:31:45 PM


There’s good news for the icy-hearted cynics in all of us: Protests actually work! A new study shows that protests against misbehaving corporations can send a company’s stock prices tumbling—just as long as the New York Times is there to cover it.

Writing for Columbia Journalism Review’s business-media blog, Elinore Longobardi discusses a new study that analyzes how media coverage impacts protests against corporations. The paper, written by sociologists Brayden G. King and Sarah A. Soule, will appear in the next issue of Administrative Science Quarterly.

King and Soule examined New York Times coverage of protests from 1962 to 1990, and discovered that while boycotts didn’t make much difference—nor did the size of the protest—Times exposure caused the defamed company’s stock value to drop between 0.4 and 1.0 percent (on average). The effect took place within one day, and the longer the Times article, the bigger the loss.

The study cites prominent examples from the time period, including protests against Dow Chemicals over its role in the Vietnam War.

The data for this study ends in 1990, but King and Soule are moving forward with additional research through 1995, which will introduce companies like Gap and Nike into the mix.



As for only choosing the Times, King and Soule found that it was the only paper worth analyzing—the Wall Street Journal and Washington Post gave paltry space to protests by comparison.



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