Abstract
•The signing of the We Mean Business letter by 71 publicly traded U.S. CEOs in April 2021 led to significant short- and long-term positive abnormal returns, indicating that markets rewarded CEO climate activism.•Results strongly support alignment theory, showing that CEO activism aligned with stakeholder values—especially on climate issues—can enhance firm value rather than harm it.•The positive effects were concentrated in innovative, technology-related industries (SIC 7000–7999), suggesting that stakeholder alignment and industry context mediate how CEO activism translates into firm performance.
CEO corporate activism is relatively new. Alignment theory predicts that a CEO’s public stance could improve firm value via a positive impact on shareholders, employees and/or customers. The signing of the Open Letter to President Biden by 408 US CEOs and investors, organized by the We Mean Business Coalition, encouraged US President Biden's commitment to climate change. The publication of this letter on April 13, 2021, provides an experiment to test the impact of Top Tier Management CEO sociopolitical activism on firm value. The event study results find robust, significant positive short-term and long-term impacts on firm value.