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How Media Coverage of Corporate Social Irresponsibility Increases Financial Risk Media Coverage of Corporate Social Irresponsibility


Kölbel, Julian F; Busch, Timo; Jancso, Leonhardt M (2017). How Media Coverage of Corporate Social Irresponsibility Increases Financial Risk Media Coverage of Corporate Social Irresponsibility. Strategic Management Journal, 38(11):2266-2284.

Abstract

This article explores the relationship between corporate social irresponsibility (CSI) and financial risk. We posit that media coverage of CSI generates risk by providing conditions that increase the potential for stakeholder sanctions. Through analyzing an international panel of 539 firms during 2008–2013, we find that firms receiving higher CSI coverage face higher financial risk. We show that the reach of the reporting media outlet is a critical condition for this relationship. Once the outlet has a high reach, the severity of CSI coverage is a boundary condition that further reinforces the effect. Our findings complement existing theory about the risk-mitigating effect of corporate social responsibility by illuminating the risk-generating effect of CSI coverage. For executives, these insights suggest complementary strategies for corporate risk management.

Abstract

This article explores the relationship between corporate social irresponsibility (CSI) and financial risk. We posit that media coverage of CSI generates risk by providing conditions that increase the potential for stakeholder sanctions. Through analyzing an international panel of 539 firms during 2008–2013, we find that firms receiving higher CSI coverage face higher financial risk. We show that the reach of the reporting media outlet is a critical condition for this relationship. Once the outlet has a high reach, the severity of CSI coverage is a boundary condition that further reinforces the effect. Our findings complement existing theory about the risk-mitigating effect of corporate social responsibility by illuminating the risk-generating effect of CSI coverage. For executives, these insights suggest complementary strategies for corporate risk management.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Language:English
Date:23 March 2017
Deposited On:22 Nov 2017 14:01
Last Modified:19 Feb 2018 09:22
Publisher:Wiley-Blackwell Publishing, Inc.
ISSN:0143-2095
OA Status:Closed
Publisher DOI:https://doi.org/10.1002/smj.2647
Related URLs:http://onlinelibrary.wiley.com/doi/10.1002/smj.2647/abstract (Publisher)
Other Identification Number:merlin-id:15310

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