Abstract
PurposeThe purpose of this study explores the effects that media coverage of corporate social responsibility (CSR) news related to primary stakeholders (e.g. customers, employees and investors) and secondary stakeholders (e.g. community) have on the market value of companies, measured as the impact generated in the positive and negative abnormal returns for those companies.Design/methodology/approachUsing a sample of 195 online papers published in the most important Spanish business newspaper during 2015, the authors implement an event study and a regression analysis that confirm the importance of CSR news for corporate financial goals.FindingsThe findings show that negative CSR news related to primary stakeholders such as investors and customers generate significant abnormal returns for companies that are notably larger than the abnormal returns generated by secondary stakeholders (e.g. community). Similarly, positive news related to primary stakeholders such as employees are the only positive news that affect market reactions significantly.Originality/valueThe study provides an empirical analysis that clarifies how media coverage of different types of CSR news affect the market value of companies. In doing so, the paper contributes to previous literature significantly because scant research exists that has compared the differential effects of CSR news focused on primary and secondary stakeholders. The findings are discussed under the premises of the managerial perspective of stakeholder theory.
Highlights
Media have significant influence on public opinion in the context of Corporate Social Responsibility (CSR) (McCombs and Reynolds, 2002)
As a first interesting finding, the results of the study confirm the relevance of media coverage of CSR news to satisfy corporate financial goals
The empirical study undertaken in this research demonstrates that the tone of the media coverage of CSR news plays a significant role in determining market reactions
Summary
Media have significant influence on public opinion in the context of Corporate Social Responsibility (CSR) (McCombs and Reynolds, 2002). Media play an indispensable role in the dialogues around CSR because it is a channel through which companies communicate their commitment to CSR to the public while it functions as an independent monitor of companies’ practices that safeguards the interests of their stakeholders (Tang, 2012) For these reasons, researchers have been looking at the link between media coverage of CSR news and market-based measures of corporate financial performance (CFP) for quite some time (Flammer, 2013; Frooman, 1997; Klassen and McLaughlin, 1996; Patten, 2008; Shane and Spicer, 1983; Shiu and Yang, 2017; Wright et al, 1995; Xu et al, 2012). We summarize the most relevant conclusions, managerial implications, limitations and future lines of research derived from the study
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