“Corporate Response to the War in Ukraine: Stakeholder Governance or Stakeholder Pressure? Emory Corporate Governance and Accountability Review” Pajuste, Anete, and Anna Toniolo

Question 1

What is the main idea?

Answer 1

Corporate leaders tend to promote stakeholder interests to avoid reputational damage, pressure from stakeholders is magnified by use of social media and is effective, but it tends to focus on big companies.

Question 2

What is the methodology used?

Answer 2

0. Descriptive statistics. (1090 companies with avg company size = $57B)
1. Discussion of relationship between company revenue and exposure to Russia.
2. Design of a Twitter-based estimate of boycott campaign virality and its relation to withdraw form Russia.
3. Examination of smallest companies in the sample (mid-cap) that are most exposed to Russia.

Question 3

What is stakeholderism?

Answer 3

Need for companies to be managed for the benefit of a broader set of stakeholders and not solely with the goal of maximizing profits

Essential for maximizing shareholder values, others believe stakeholders should be the focus regardless of shareholder value.

Critics: stakeholder interests present trade-offs which are hard to resolve, and that can alleviate managers from their responsibility (easy to say I just focus on the customer).

Question 4

What is the focus of the paper? Why are they researching it?

Answer 4

What drove firms to decisively respond to invasion of Ukraine. (support Ukraine by hindering Russia)

Firms that withdraw from Russia are rewarded and those that remain are punished (in Academia and public)

Question 5

What are the hypotheses?

Answer 5

Companies withdrew from Russia because of:

Hypothesis 1: Ethical judgement, even at the cost of shareholders.

Hypothesis 2: (Small) exposure to Russia and reputational risks.

Question 5

What are the 3 important implications (things to consider) for debate on stakeholder governance?

Answer 5

Risks of “Woke-Washing”
Stakeholder Pressure
Stakeholder Governance Gap

Question 6

What do the risks of “Woke-Washing” imply?

Answer 6

For companies with insignificant exposure to Russia the announcement to exit the country could be a marketing decision to attract positive attention rather than a genuine concern for the war in Ukraine.

Firms’ announcements of stakeholder-centric behavior do not necessarily result in actual improvements in treatment of stakeholders

Question 7

What does stakeholder pressure imply?

Answer 7

Twitter-based “virality” played an important role in companies cutting ties with Russia.

Stakeholder pressure is an effective instrument to promote responsible management; However it can only complement – but not substitute − stakeholder-protecting regulation (otherwise companies can pick side with more leverage)

Question 8

What does stakeholder governance gap imply?

Answer 8

Stakeholder Governance Gap – bigger companies get more attention on their governance, but the governance of smaller companies is poorer. (Boycott campaigns went more viral for larger companies)

Important because small companies can be just as harmful as big companies if they conduct a significant portion of business in Russia

Question 9

What were the different sources of public pressure?

Answer 9

Political Pressure;
Boycott Campaigns;
Yale School of Management (SOM) List;
Stock Prices

Question 10

How did firms justify leaving/staying Russia?

Answer 10

For leaving:
 Moral/ethical reasons
 Long-term interest of shareholders

For staying: (labeled window-washing)
 Interests of stakeholders (Russian employees/population)
 Supplying essential goods (often not so essential ;) )

Question 11

How did the boycott campaign affect withdrawal from Russia?

Answer 11

Boycott campaign virality is substantially higher among larger companies.

Firm-specific boycott campaign virality is positively related to the leaving Russia decision.

Question 12

How did firms respond to the pressure of leaving Russia?

Answer 12

o Some made a clean break, permanently exiting
o Others did not divest, but suspended operations
o Some suspended a major or minor part of the business
o Some announced intention to leave and sold assets to local buyers
o Some did not do anything at all

Question 13

How has the stakeholder governance debate evolved?

Answer 13

• Post-war era: shareholder primacy vs stakeholder theory (corp. must balance the interest of all its stakeholders)
• Major CEOs and the World Economic Forum supported stakeholder theory