Hidden in a Group? Market Reactions to Multi-Violator Corporate Social Irresponsibility Disclosures

Abstract

The public media often discloses multiple firms’ corporate social irresponsible (CSI) behaviors all together (i.e., multi-violator CSI disclosures). Drawing on attribution theory, we propose that multi-violator CSI disclosures generate perceptions of high consensus across all implicated firms’ behaviors. Such consensus leads shareholders to attribute each firm’s CSI behaviors to external factors and subsequently lessens negative market reactions to the implicated firms. Further, the situational distinctiveness and temporal consistency of the focal firm’s past CSI behaviors mitigate the relationship between CSI disclosure type (i.e., multi-violator vs. single-violator CSI disclosures) and stock market reactions. Empirical findings based on a sample of 30,739 public media CSI disclosures linked to 1,166 S&P 1500 firms between 2008 and 2017 support our hypotheses.