Media, Partisan Ideology, and Corporate Social Responsibility

Abstract

We study the effect of conservative media on corporate social responsibility (CSR) ratings of firms using the staggered expansion of Sinclair Broadcast Group: the largest conservative network in the U.S. local TV markets. The entry of Sinclair to a region is not driven by local economic or ideological factors. In a difference-in-differences setting, we find that CSR ratings of exposed firms decline significantly in all three dimensions: environmental, social, and governance. We provide evidence suggesting that change in local ideology is an important driver of the results. The effect is larger for firms in sin (alcohol, tobacco, and gambling) industries, with a history of federal prosecution, in conservative counties, with younger CEOs, and with lower institutional ownership. Exposure to Sinclair has a negative impact on local firms' Tobin's Q and stock returns.

Keywords: corporate social responsibility, partisan media, political ideology

JEL Classification: G34, D72, L82, M14