How do socially controversial companies do during a stressful time? Evidence from the Great Recession

Pattanaporn Chatjuthamard, Patcharawalai Wongboonsin, Kritika Kongsompong, Pornsit Jiraporn

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

This study investigates the performance of socially controversial companies during a financial crisis. Companies are usually considered controversial if they are involved in controversial businesses such as alcohol, tobacco, firearms, nuclear etc. The results show that controversial firms exhibit higher firm value as well as better accounting performance during the Great Recession than otherwise similar, albeit non-controversial, firms. The results are consistent with the notion that the demand for controversial products remains relatively stable even during a stressful time. Further analysis confirms the results, including random-effects analysis, GMM dynamic panel data analysis, and instrumental-variable (IV) analysis. The results of this paper are particularly relevant to portfolio management, where controversial firms may be added to portfolios to inoculate them from a negative shock brought about by an economic crisis.

Original languageEnglish (US)
Article number100898
JournalNorth American Journal of Economics and Finance
Volume54
DOIs
StatePublished - Nov 2020

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Fingerprint Dive into the research topics of 'How do socially controversial companies do during a stressful time? Evidence from the Great Recession'. Together they form a unique fingerprint.

Cite this