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Spinning gold: The financial returns to stakeholder engagement
Author(s) -
Henisz Witold J.,
Dorobantu Sinziana,
Nartey Lite J.
Publication year - 2014
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.2180
Subject(s) - stakeholder , capitalization , market capitalization , valuation (finance) , business , market value , finance , index (typography) , economics , accounting , stock market , management , paleontology , linguistics , philosophy , horse , world wide web , computer science , biology
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.