Investors’ response to the #MeToo movement: does corporate culture matter?

Abstract This paper provides evidence that the #MeToo movement revised investors’ beliefs about costs (benefits) of fostering an exclusive (inclusive) culture, as reflected by absence (presence a critical mass) women directors in board room. Tracking timeline events associated with begin Harvey Weinstein exposé October 2017 New York Times , we document contrasting market reactions to depending on existing culture firm. Firms historically excluded from their experienced negative response momentum for cause increased, whereas investors responded favorably firms embraced inclusion boards. In contrast, do not detect differences market’s randomly generated pseudo-events during same time frame when comparing and inclusive cultures. context increased regulator attention gender diversity, well ESG activist campaigns large institutional investors, our study documents shift risks sexual misconduct value having boardroom shaping