TY - JOUR
T1 - Why bad news can be good news
T2 - the signaling feedback effect of negative media coverage of corporate irresponsibility
AU - Fu, Limin
N1 - Publisher Copyright:
© The Author(s) 2022.
PY - 2022
Y1 - 2022
N2 - Can bad news also be good news? In this study, I explicate why bad news about firms’ corporate social irresponsibility (CSiR) can be good news for firms. Specifically, I address the role of negative media coverage of CSiR in firms’ corporate social performance (CSP). Drawing on signaling theory, I propose that negative media coverage of CSiR is a form of costly yet effective external feedback to firms’ current social signaling. It, therefore, propels firms to undertake organizational changes to send positive response signals through improved CSP. Furthermore, I argue that this effect is augmented by organizational innovation search, which influences firms’ learning capacity required to improve firms’ CSP. Using a multicountry sample of 1,049 firms between 2007 and 2016, I find that negative media coverage of CSiR induces firms to enhance CSP, and this effect is moderated by organizational innovation search.
AB - Can bad news also be good news? In this study, I explicate why bad news about firms’ corporate social irresponsibility (CSiR) can be good news for firms. Specifically, I address the role of negative media coverage of CSiR in firms’ corporate social performance (CSP). Drawing on signaling theory, I propose that negative media coverage of CSiR is a form of costly yet effective external feedback to firms’ current social signaling. It, therefore, propels firms to undertake organizational changes to send positive response signals through improved CSP. Furthermore, I argue that this effect is augmented by organizational innovation search, which influences firms’ learning capacity required to improve firms’ CSP. Using a multicountry sample of 1,049 firms between 2007 and 2016, I find that negative media coverage of CSiR induces firms to enhance CSP, and this effect is moderated by organizational innovation search.
KW - corporate social performance (CSP)
KW - corporate social responsibility (CSR), innovation search
KW - nonfinancial disclosure
KW - R&D
KW - signaling theory
UR - http://www.scopus.com/inward/record.url?scp=85135176721&partnerID=8YFLogxK
U2 - 10.1177/10860266221108704
DO - 10.1177/10860266221108704
M3 - Article
AN - SCOPUS:85135176721
JO - Organization and Environment
JF - Organization and Environment
SN - 1086-0266
ER -
