Cultural factors in investor ownership decisions. Evidence from geo-political shocks presented by Professor Kateryna Holland

Professor Kateryna Holland will present on her current research paper titled “Who Cares about the ‘S’ in ESG: Cultural and Institutional Factors in Shareholder Response to a ‘S’ocial Reputation Shock.” The abstract of the paper is as follows: We employ the murder of Jamal Khashoggi, allegedly at the hands of agents of the Kingdom of Saudi Arabia (KSA), as a shock to the reputation of publicly traded firms, from over 59 countries, with connections to the KSA. We find significant stock price declines for foreign firms with KSA connections around the announcement of the murder. These firms lost approximately USD 986.5 mln of market capitalization. Shareholder decisions to divest stakes in these firms are influenced by institutional (civil law legal origin and freedom of the press) and cultural (femininity, restraint, uncertainty avoidance, and collectivism) factors. Our findings shed light on the complex interplay between geopolitical events, institutional and cultural factors, and shareholder behavior.