The Impact of Consumer Boycotts on Company Success
Start Date
April 2024
Location
2nd floor - Library
Abstract
Boycotts are a tool used by consumers to force companies to make changes; whether it be to their products, labor practices, causes they support, etc. In the recent months, for example, a number of companies have faced consumer boycotts related to the Israel-Palestine conflict. The Palestinian Boycott, Divestment, and Sanctions Movement (BDS) is currently calling people across social media platforms to join in on boycotts against companies like McDonalds, Puma, Burger King, etc. (Ethical Consumer). The proliferation of boycotts across numerous platforms caused me to question if these efforts to pressure companies really make an impact. I hypothesize that consumer boycotts have a negative impact on the annual returns of these companies but don’t have a significant long-term effect. To find out if this is the case, I conducted a study across fifteen publicly-traded companies that have experienced consumer boycotts in the past 12 years using publicly-available information found on each company’s website, NASDAQ, and Ethical Consumer. To operationalize how consumer boycotts impact company stock, I used Bloomberg data to track the annual rate of return for each company for the year before the boycott started, the first year of the boycott, and three years after to see if there was any long-term impact. For comparison purposes, I used data from Bloomberg to track the annual rate of return from the S&P 500 and the performance of each sector in the years before, during, and post-boycott.
The Impact of Consumer Boycotts on Company Success
2nd floor - Library
Boycotts are a tool used by consumers to force companies to make changes; whether it be to their products, labor practices, causes they support, etc. In the recent months, for example, a number of companies have faced consumer boycotts related to the Israel-Palestine conflict. The Palestinian Boycott, Divestment, and Sanctions Movement (BDS) is currently calling people across social media platforms to join in on boycotts against companies like McDonalds, Puma, Burger King, etc. (Ethical Consumer). The proliferation of boycotts across numerous platforms caused me to question if these efforts to pressure companies really make an impact. I hypothesize that consumer boycotts have a negative impact on the annual returns of these companies but don’t have a significant long-term effect. To find out if this is the case, I conducted a study across fifteen publicly-traded companies that have experienced consumer boycotts in the past 12 years using publicly-available information found on each company’s website, NASDAQ, and Ethical Consumer. To operationalize how consumer boycotts impact company stock, I used Bloomberg data to track the annual rate of return for each company for the year before the boycott started, the first year of the boycott, and three years after to see if there was any long-term impact. For comparison purposes, I used data from Bloomberg to track the annual rate of return from the S&P 500 and the performance of each sector in the years before, during, and post-boycott.
