The Nonmarket Insurance like Effect of CSR on Media Sentiment

28 Pages Posted: 18 Mar 2021

See all articles by Abhilash S. Nair

Abhilash S. Nair

IIM Kozhikode

Suresh Kalagnanam

University of Saskatchewan - Edwards School of Business

Date Written: December 10, 2020

Abstract

The purpose of this study is to test whether CSR engagement provides insurance like effect even after the firm has faced an integrity questioning event. The impact of this integrity based negative event is measured as the media sentiment while reporting the event. Accordingly, we test whether prior CSR engagement prompts media to give the firm the benefit of doubt when it is accused of ‘grand corruption’. The study employs techniques of textual analysis combining various dictionaries and multiple media sources to estimate the sentiment score. Accordingly, we analyse 45,710 media reports, covering firms allegedly involved in ‘grand corruption’. The hypothesis are tested following standard panel data analysis techniques. The study finds no evidence of CSR providing an insurance like effect, particularly in the context of integrity-based negative events. Rather, the results suggest that the media may have viewed the CSR activity of sample firms as a public relations exercise and penalized them for being involved in grand corruption.

Keywords: CSR, Insurance-like effect, Media sentiment, Grand corruption

JEL Classification: G22, G34

Suggested Citation

Nair, Abhilash Sreekumar and Kalagnanam, Suresh S., The Nonmarket Insurance like Effect of CSR on Media Sentiment (December 10, 2020). Available at SSRN: https://ssrn.com/abstract=3779113 or http://dx.doi.org/10.2139/ssrn.3779113

Abhilash Sreekumar Nair (Contact Author)

IIM Kozhikode ( email )

Kunnamangalam
Kozhikode, KS Kerala 673570
India

Suresh S. Kalagnanam

University of Saskatchewan - Edwards School of Business ( email )

Saskatoon, Saskatchewan S7N 5A7
Canada

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
11
Abstract Views
91
PlumX Metrics