Can negative media coverage drive corporate environmental responsibility? Evidence from heavy-polluting companies in China

Abstract

Despite previous literature has discussed the benefits that positive media coverage can bring to firms, it was still poorly studied in the effect of negative media coverage on corporate behaviours. This paper focuses on corporate environmental behaviours, investigates the impact and mechanisms of negative media coverage on corporate environmental responsibility (CER). We use the data of China’s listed companies in heavy-polluting industries from 2006 to 2019, an event-study analysis is undertaken to identify the treatment effect in CER after the exposure of corporate pollution. The results find that when media cover the pollution event of firms, these improve their CER scores by 2.23% with respect to those plants that were not covered. Moreover, the larger increase in media coverage, the greater impact on corporations. Mechanism analysis shows that reaction of the local community, government environmental regulations, and managers’ reputations operate as essential channels for negative media coverage to affect CER.