Market reactions to CSR news in different industries

Abstract

Purpose- Based on the premises of the institutional theory, in this paper we explore the effects that media coverage of positive and negative Corporate Social Responsibility (CSR) news have on the stock market value of companies in diverse industries. Design/methodology/approach - Using a sample of 195 online articles published in the most important Spanish business newspaper, we implement an event study and a regression analysis. Findings - The findings show that positive and negative CSR news usually have significant impacts on the stock market value of companies. Specifically, the market reaction is stronger under the announcement of negative news in all industries (i.e., basic, energy, finance and goods and services) although positive news also cause significant positive stock market reactions in the finance and basic industries. Originality/value - Although the media plays an indispensable role in the dialogue around CSR, much of the research focused on the role of the media on the CSR-CFP link does not consider how the industry variable can affect the abnormal stock returns derived from CSR news. This research contributes to this gap in literature by exploring the differences that exist in the stock market reactions to CSR news based on the industry in which the companies operate.