The Information Mechanism in Corporate Citizenship: Evidence from COVID-19

Abstract

We explore how information exposure, specifically information transmission within organizations, facilitates companies’ roles as corporate citizens. We study whether US firms’ business networks with China and Italy become their information advantage, and examine whether firms use relevant information to mitigate the negative shocks of COVID-19. We start by validating our measurement of information exposure. Next, we find that a higher number of work-from-home (“WFH”) policies, as evidenced by a higher stay-at-home ratio, are implemented in areas with more information-exposure companies, even before local governments impose a lockdown. To further demonstrate corporate citizenship, we document firms’ positive social externalities — lower COVID-19 growth and an influence on other firms’ WFH policies — and show suggestive evidence on firms’ social motives.