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Open Access Publications from the University of California

Social Media Activism's Impact on Global Retailers


This paper investigates the impact of social media movements on shareholders' wealth. The #WhoMadeMyClothes Twitter campaign is an annual social media movement that emerged after the collapse of the Rana Plaza, a building in Bangladesh that housed five garment factories, in April 2013. The global campaign serves as a remembrance day for the factory victims and gives social media users an outlet to address ethical concerns towards apparel retail companies that were buyers of the Rana Plaza factories. My research investigates how this Twitter campaign, in specially April 2015, impacted the stock returns of the companies involved in the Rana Plaza collapse. My analysis is based on 180 publicly traded, global apparel and retail firms. I find an overall negative stock market reaction towards the US firms, regardless of their relationship to the factories, when aggregating over the all active campaign days. However, when pooling firms from all represented countries, I find that only firms involved in the collapse experienced significant negative returns. These firms are also more likely to experience negative returns after the campaign day, compared to the other firms that were not involved in the collapse. On a global perspective, shareholders may have punished firms that had significant ties to the collapse during and after the campaign day. Isolating US firms, a spillover effect might explain the negative returns for apparel and retail firms in general, regardless of their relation to the collapse

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