Get access

Spinning gold: The financial returns to stakeholder engagement

Authors

  • Witold J. Henisz,

    Corresponding author
    1. Management Department, The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania, U.S.A.
    • Correspondence to: Witold J. Henisz, Management Department, The Wharton School, University of Pennsylvania, 3620 Locust Walk, Philadelphia, PA 19104-6370, U.S.A. E-mail: henisz@wharton.upenn.edu

    Search for more papers by this author
  • Sinziana Dorobantu,

    1. Management & Organizations, Leonard N. Stern School of Business, New York University, New York, New York, U.S.A.
    Search for more papers by this author
  • Lite J. Nartey

    1. Sonoco International Business Department, Darla Moore School of Business, University of South Carolina, Columbia, South Carolina, U.S.A.
    Search for more papers by this author

Abstract

We provide direct empirical evidence in support of instrumental stakeholder theory's argument that increasing stakeholder support enhances the financial valuation of a firm, holding constant the objective valuation of the physical assets under its control. We undertake this analysis using panel data on 26 gold mines owned by 19 publicly traded firms over the period 1993–2008. We code over 50,000 stakeholder events from media reports to develop an index of the degree of stakeholder conflict/cooperation for these mines. By incorporating this index in a market capitalization analysis, we reduce the discount placed by financial markets on the net present value of the physical assets controlled by these firms from 72 percent to between 37 and 13 percent. Copyright © 2013 John Wiley & Sons, Ltd.

Ancillary