Activism risk and corporate self‐regulation: Investigating how anti‐SLAPP laws impact firms' institutional corporate social performance

Research Summary This research investigates how firms attempt to preempt activism before it mobilizes into an active threat. Employing a difference‐in‐differences design, we examine the quasi‐exogenous enactments of laws that prevent Strategic Lawsuits Against Public Participation (anti‐SLAPP laws) in the United States. We find evidence suggesting that in response to the enactment of anti‐SLAPP laws, firms self‐regulate through enhancing their institutional corporate social performance (institutional CSP). This response is more pronounced in firms with greater firm‐specific activism risk, as evidenced by greater media coverage on firms' social irresponsibility. These findings suggest that, in response to activism risk, firms attempt to keep activists from targeting them by preemptively engaging in self‐regulatory improvement in their institutional CSP. The preemptive action we document extends research on stakeholder activism. Managerial Summary By analyzing how US firms respond to the enactment of laws that prevent Strategic Lawsuits Against Public Participation (anti‐SLAPP laws), we find that in anticipation of activist attacks, firms enhance their institutional corporate social performance (institutional CSP). This proactive response is more evident in firms facing a heightened risk of activism, such as those with substantial media exposure for socially irresponsible outcomes. We suggest the looming institutional risk of activism prompts firms to engage in self‐regulatory adaptation in enhancing their institutional CSP, hopefully mitigating the risk of being targeted by stakeholder activists.