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Corporate decision-makers have increasingly adopted an approach to firm governance that places share value above other concerns, including meeting the needs of employees. Decision-makers’ concerns about shareholder interests may potentially impede internal commitments to implementing diversity-friendly practices and policies. This study analyses how recognition for a company's diversity efforts impacts corporate share price. We rely on data of share price fluctuation following the receipt of Fortune Magazine's ‘Best Companies for Minorities’ Award. We find that companies recognized for their diversity efforts are penalized with a significant decline in share price, though this negative effect is mediated by the ethnic composition of the company's workforce. [ABSTRACT FROM PUBLISHER]

ABSTRACT This research utilized an event study method to assess how the stocks of publicly traded companies responded before and after announcing their partnership with the United States Environmental Protection Agency (USEPA) Climate Leaders program. Although the stocks exhibited an average non-significant positive abnormal return of 0.56% on the day of the announcement, the cumulative abnormal returns for the stock prices of the firms for two of the three event windows showed statistically significant negative returns. These results suggest that these firms' public announcements of joining the USEPA Climate Leaders partnership did not have a positive impact on stock performance. While no immediate financial benefit was found in this research, the practices implemented by these firms to reduce their greenhouse gas emissions may still bode well for long-term corporate earnings and attractiveness to investors. Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment. [ABSTRACT FROM AUTHOR]

This study examines whether the appointment of racial/ethnic minorities into top management positions has a different impact on share price than the appointment of members of the racial/ethnic majority into equivalent positions. Our dependent variable is the degree of change in share price following the announcement of minority and majority men into senior management positions. Market reaction to the naming of minorities into corporate leadership positions is significant and negative while the market's reaction to the naming of members of the racial/ethnic majority is significant and positive. Our findings suggest that racial/ethnic integration of corporate hierarchies may be impeded as investor reaction increasingly drives firm-level governance decisions. [ABSTRACT FROM AUTHOR]

In a comprehensive study extending prior research, Prince and Rubin (2002) use the event study methodology, and find negative market reaction to a sample of 15 initial filings of product liability litigation and 29 other litigation events against U.S. automakers between 1973 and 1995. They conclude that the event study methodology is a useful way to measure the costs of litigation. In contrast, after examination of a new sample of 144 initial filing events and 465 other litigation events for six major automobile firms from 1985 to 2000, and after re-examining Prince and Rubin's data, we find that the market reaction to all but the most extreme and infrequent events is generally not significant. We suggest that the event study methodology may not generally be useful to study the social costs of litigation, but may be useful for unexpected abnormal litigation events where the potential liabilities (including reputation and other losses triggered by litigation) may far exceed the legal liability reserves set up by firms. We find mixed results for the market impact of litigation against a competitor. When a product liability lawsuit is first filed against a U.S. firm, the market values of the Japanese firms significantly decline. When a Japanese firm is sued for product liability, the U.S. firms register a significant increase in market value. However, these spillover results have to be interpreted with caution because of small sample sizes and possible confounding events. [ABSTRACT FROM AUTHOR]

The event study methodology is used to assess the effects of terrorism on global capital markets. We examine the U.S. capital market''s response to 14 terrorist/military attacks dating back to 1915 and global capital markets'' response to two recent events—Iraq''s invasion of Kuwait in 1990 and the September 11, 2001 terrorist attacks. U.S. capital markets are more resilient than in the past and recover sooner from terrorist attacks than other global capital markets. Evidence suggests that this increased market resilience can be partially explained by a stable banking/financial sector that provides adequate liquidity to promote market stability and minimize panic. [Copyright &y& Elsevier]