Companies are increasingly held accountable for their corporate social irresponsibility (CSI). However, the extent to which a CSI event causes damage to the firm largely depends on the coverage of this event in high-reach news media. Using the theory of news value developed in communications research, the authors explain the amount of media coverage by introducing a set of variables related to the event, the involved brand, and media outlet. The authors analyze a sample of 1,054 CSI events that were reported in 77 leading media outlets in five countries in the period 2008–2014. Estimation results reveal a significant number of drivers: for example, the number of media covering the story may be 39% higher for salient and strong brands. 80% more media report the event if a foreign brand is involved in a domestic CSI event. When a brand advertises heavily or exclusively in a news medium, this reduces the likelihood of the news medium to cover negative stories about the brand. The average financial loss at the U.S. stock market due to a CSI event amounts to US$ 321 million. However, the market only reacts to the event if 4 or more U.S. high-reach media outlets report on the event.
- brand management
- corporate social irresponsibility
- event study
- mixed binary logit model
- theory of news value