Doing good with or without being known? Media coverage of corporate social performance and its impact on corporate financial performance

Abstract

Purpose – The purpose of this paper is to examine the media coverage of corporate social performance (CSP), as well as the ultimate impact that such coverage has on the financial performance of corporate entities. Design/methodology/approach – Based on a sample of financial holding companies (FHC) listed on the Taiwan Stock Exchange, the authors select the two most popular newspapers in Taiwan, to construct the unique media coverage of CSP activity database. Findings – First, the quantity of news articles about social activities of FHCs is positively correlated with financial performance. Second, the authors find that news articles about FHCs’ positive social activities for shareholders will trigger a positive evaluation by shareholders; however, news articles about FHCs’ positive (negative) social activities for employees will trigger a negative (positive) evaluation by shareholders. But if the news articles about FHCs’ positive social activities for employees are initiated by the media, rather than by the company itself, they will trigger a positive evaluation by shareholders. Originality/value – The average shareholders may praise management for one particular CSP activity of a positive nature, whereas they may criticize another CSP activity, despite it being generally regarded outside of the firm as also being positive in nature. It therefore becomes clear that when setting out to investigate whether “doing good” actually does translate into “doing well,” the authors should not attempt to total different kinds of information on CSP; In this paper, the authors emphasize that they need to be analyzed separately.

Media, independent non-executive directors and strategy disclosure by non-financial listed firms in the UAE

“…Rupley et al (2012) found no significant relation between positive or neutral media tone and environmental disclosure, yet found that negative media coverage significantly drives firms' managers towards environmental disclosure. Chih and Chih (2014) found a positive association between positive media tone and stock returns, while neutral and negative media coverage were not significant. We argue that to convince stakeholders that their strategic plans can overcome negative publicity; firms provide higher levels of SD when facing negative media.…”

“…Post-regression estimation tests reveal that the fixed effect model is a possible fit to our data set (Yekini et al, 2017). Based on prior studies of media coverage, media tone and firm-specific variables (García-Sá nchez et al, 2011; Rupley et al, 2012;Garcia-Sanchez et al, 2014;Chih and Chih, 2014;Cahan, et al, 2015;Aly et al, 2018;Byun and Oh, 2018;Zaman et al, 2018), we investigate whether media coverage (volume), media tone (positive, neutral and negative) and the interaction between media tone and INEDs affect the level of SD by UAE listed non-financial firms.…”

“…Although the volume of media coverage has been analyzed in prior studies, some scholars argue that "tone" is an important element of media coverage (Rupley et al, 2012;Chih and Chih, 2014;Aly et al, 2018). Aly et al (2018) investigated the association between tone of narrative disclosure and firms' financial performance, concluding that a positive tone is positively associated with ROA, while a negative tone has a negative influence on firm performance.…”

Socially responsible investing: a review of the critical issues

“…If so, then findings of superior performance are the result of an additional fifth factor beyond the Carhart four factor model. For instance, Chih and Chih (2014) found that only information on positive CSR activities provided by the media lead to a favorable reaction by shareholders. In addition, not all positive CSR news was 'good news': positive employee welfare news, in particular, can result in negative performance, perhaps indicating that shareholders see such a use of firm resources will ultimately be detrimental to maximizing shareholder value.…”

“…Linking CSR activities directly to firm value can be difficult. Not only does the information on such activities need to be credible, but enough shareholders need to be interested in and approve of CSR behavior to link CSR rankings to firm performance (Chih and Chih, 2014). It is also important to know whether a firm's superior performance is a compensation for additional risk; that is, if an informed investor perceives SR investments as riskier than others.…”