The first essay theorizes and quantifies the effects of CEO activism on firms’ financial performance. We examine this relationship within the framework of screening theory. We find that CEO social activism generally leads to adverse investor reactions. This negative effect is most prominent when there is interdimensional incongruence in CEO social activism messages. In addition, we find that the negative effect of CEO social activism is moderated by organizational characteristics that resolve incongruence caused by disparate signals. The second essay seeks to understand how a CEO’s social activism influences corporate social performance. We hypothesize that CEO social activism will have a negative influence on a wide variety of firm-level social performance indicators due to previous theory and research which finds that firms have self-serving intentions behind corporate social responsibility. Consistent with our prediction, we find that CEO social activism negatively influences the firms’ social performance with respect to human rights. We also find partial support for a negative relationship between CEO social activism and the firms’ subsequent social performance regarding the natural environment. Contrary to our theoretical prediction, we find that CEO social activism positively influences firms’ social performance with respect to the community dimension; and we find no relationship between social performance related to employee well-being. These findings suggest that by and large, CEO social activism has negligible or negative influences on various aspects of the firm’s social performance, with the possible exception of social activism within the firm’s local communities. We also find that CEO power sometimes accentuates these relationships.
