Challenging the Stigma Narrative: An Examination of the Actual Impact of Stigmatization on Business Success
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2023-06-27
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en
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An increase in corporate scandals has stimulated the interest in organizational stigmas. The latter seems to impact a company’s stock price and due to the emergence of woke capitalism, this effect may only be more detrimental. This study aims to fill this gap in literature and examines the impact organizational event stigma has on stock prices and whether woke capitalism, associated with a heightened social and racial awareness, influences this effect. Organizational event stigma refers to the negative perception a company faces after a specific event, such as organizational misconduct. This event or scandal reflects negatively on a company, causing investors and stakeholders to lose trust, which could affect a company’s stock price and overall performance. The heightened awareness the of Gen Z and millennials, also referred to as Generation woke, raises concerns among business owners regarding the rapid stigmatization of companies and the potentially significant impact it can have.
To investigate the magnitude of the impact of organizational event stigma, with the intervention of woke capitalism, this study analyses company stock prices after a scandal, for both scandals that have taken place before and after the rise of woke capitalism. This has been done based on multiple regression analysis, to explore the initial expectation of a negative impact of organizational event stigma on stock prices, moderated by an amplifying negative effect of woke capitalism.
However, the findings of this study did not support the initial hypotheses. While the analysis did find a significant negative effect of organizational event stigma on a company’s stock price, woke capitalism does not seem to amplify this negative effect. In fact, it seems to mitigate the negative effect, as the negative effects of scandals in the era of woke capitalism tend to decrease less for scandals compared to those that occurred before. These findings, suggest that organizational event stigma does have a negative effect, but the increased awareness does not have an amplifying effect.
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Faculteit der Managementwetenschappen