When does corporate social irresponsibility become news? Evidence from more than 1,000 brand transgressions across five countries

Samuel Stäbler, Marc Fischer

Research output: Contribution to journalArticleScientificpeer-review

Abstract

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.
Original languageEnglish
JournalJournal of Marketing
DOIs
Publication statusE-pub ahead of print - Mar 2020

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Keywords

  • brand management
  • corporate social irresponsibility
  • event study
  • media
  • mixed binary logit model
  • theory of news value

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