Social issue boycotts can influence board turnover

– Study shows a modest increase in board turnover if there is a boycott against a company.
– Board turnover is higher if a director shares the boycotter’s goals.

Here’s a note from TheCorporateCounsel.net: According to an academic study, researchers say social boycotts can lead to increased board turnover at targeted companies. The study’s abstract provides an overview explaining that researchers studied how personal social values affect directors’ willingness to serve on boards. The researchers found when director ideologies are aligned with those of activists targeting a company on which they serve, a director is more prone to leaving.

The findings aren’t that surprising as one would hope directors and companies are somewhat aligned with their values. In terms of what this could mean, the researchers note social values may become an even more central part of future director recruitment as millennials and younger generations tend to place more emphasis on social impact.

This excerpt from the Academy of Management Insights (subscription required) summarizes the study’s findings:

– Boycotted firms experienced a 7% increase in board director turnover

– Boards faced a greater likelihood of director turnover among directors who shared ideologies with boycotters (liberal directors were more likely to leave after liberal boycotts, and vice versa)

– Directors became more loyal to firms that were targeted by movements from the opposing ideology. Conservatives, compared to liberals, were especially prone to loyalty when their firms faced challenges from liberal activists

– The link between shared social values and director exits was stronger after boycotts that caused stock prices to drop