Stephan Meier

No News Is Good News: CSR Strategy and Newspaper Coverage of Negative Firm Events

Coauthor(s): Jiao Luo, Felix Oberholzer-Gee.

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Abstract:
One of the benefits of Corporate Social Responsibility (CSR) programs, it has been argued, is that they build up a reservoir of public good will, shielding companies in times of trouble. In this paper, we test the view that CSR provides protection from public ire by analyzing the media's response to corporate crises. Our application is spills in the oil industry. We find the media far more likely to report accidents if they occur at a company with a superior CSR record. Rather than acting as an effective form of insurance, our results suggest that a strong CSR record can be a liability. Moreover, the tone of coverage is no less critical for organizations with a greener reputation. At the same time, firms with substantial past environmental problems are also more likely to find their corporate failings broadcast in the news. Companies hoping to minimize the risk of media attention to accidents need to be careful not to place their organizations at the very top or the very bottom of CSR rankings. This result has important implications for thinking about CSR and the privately optimal level of such activities.

Source: Working Paper
Exact Citation:
Luo, Jiao, Stephan Meier, and Felix Oberholzer-Gee. "No News Is Good News: CSR Strategy and Newspaper Coverage of Negative Events." Working Paper, Columbia Business School, 2012.
Date: 2012