Customers’ response to firms’ disclosure of social stances: evidence from voting reform laws

We examine customer responses to publicly traded firms speaking out in response to the state of Georgia’s voting reform laws. For firms that speak out, we find that customer visits and visitors at their stores decrease relative to the stores of firms that do not speak out. The decrease in customer traffic is stronger for stores in Georgia, predominantly Republican counties, and for firms whose speaking out was emphasized by conservative media sources. The results are weaker for stores in counties with more diverse populations. We also find that total spending, spending per transaction, and spending per customer decrease after firms speak out. Our results are attributed to a decrease in traffic from less frequent customers who spend less time shopping but offset by customers who increase their shopping time. Consistent with offsetting effects, we do not find evidence that speaking out is associated with changes in firm-level financial performance or an equity market response. Our findings highlight different customer responses to speaking out that help us better understand the implications of companies’ engagement in societal issues.