1. The document analyzes over 1,000 instances of corporate social irresponsibility (CSI) events across five countries to determine what factors influence whether a CSI event becomes news and impacts a brand's stock price. 2. It finds that news selection variables like brand strength, salience, domestic vs. foreign brand, and political orientation of media outlets influence the likelihood an event is reported. A CSI event is more likely to be reported if it involves a strong, salient brand operating domestically or abroad. 3. For an event to impact stock price, it generally needs to be reported by 4 or more major US media outlets. On average, CSI news coverage results in $321 million in financial

1. From: Stäbler and Fischer (2020)
When Does Corporate Social
Irresponsibility Become News?
Evidence from More than 1,000 Brand Transgressions Across Five Countries
1

2. From: Stäbler and Fischer (2020)
Nature of Brand Transgressions Studied
This study focuses on corporate social irresponsible (CSI) issues
Environmental issues Governance issuesSocial issues
Violation and endangerment of
environmental surroundings
• Violation and endangerment
of nature
• Violation and endangerment
of animals / wildlife
Violation of compliance with human
rights and conditions of employment
• Violations of employee relations
with respect to discrimination,
wages, diversity standards, local
working conditions, foreign labor
issues
• Human rights violations
Management misconduct relating to
corporate governance or social norms
and societal rules
• Transparency violations
• Consumer fraud with regard to sales
practices and pricing policies
• Corruption (e.g., bribery, money
laundering, tax disputes, breach of
trust)
Example: BP deep water
horizon crisis in 2010
Example: Price fixing scandal
of Apple in 2012
Example: Child labor issues at
Asos factories in Turkey 2016

3. From: Stäbler and Fischer (2020)
J.P. Morgan accused of fraud
Media coverage: 20%*
Goldman Sachs accused of fraud
Media coverage: 90%*
*Note: Reporting media outlets out of 10 leading outlets in the U.S.
Impact on brand strength Impact on brand strength
76
78
80
82
84
86
-9 -6 -3 0 3 6
BrandIndex[-100,100]
Weeks before and after crisis event
91
93
95
97
99
101
-9 -6 -3 0 3 6
BrandIndex[-100,100]
Weeks before and after crisis event
-14
-16
-18
-20
-22
-24
1
-1
-3
-5
-7
-9
Two banks are accused of
the same wrongdoing but
media coverage differs:
Why?
2
Higher media coverage of a brand transgression causes
more damage to the brand

4. From: Stäbler and Fischer (2020)
What determines what
becomes brand
transgression news
and why it matters?
Media coverage drives
the stock market
reaction to the news
3
News selection variables
determine when an event of
corporate social irresponsibility
(CSI) becomes news

5. From: Stäbler and Fischer (2020)
Effects of key news selection factors
- On average, 1 out of 5 outlets cover a CSI
event, but only 1 out of 10 cover the story
when the involved brand is an advertising
partner.
- 39% more media cover stories on salient
and strong brands.
- 80% more media report the event if a foreign
brand is involved in a domestic CSI event.
- Left oriented media outlets are more likely
to report on a CSI event than right
oriented media outlets.
Stock market reactions
- The stock market only reacts to the event
if 4 or more U.S. media outlets report on it.
- The average financial loss in the U.S.
stock market amounts to US$ 321 million.
Key insights from analyzing 1,053 CSI events

6. From: Stäbler and Fischer (2020)
Selected news selection variable Likelihood of reporting CSI event Financial impact of news variables
Base scenario: 17.3%
– 321 million $
Threshold of 4 media reporting
(deviations from base case in parentheses).
Brand salience ∆ 6.7%
Brand strength ∆ 3.5%
Domestic CSI event ∆ 7.7%
Domestic CSI event  Foreign brand ∆13.9%
Evidence-based CSI event ∆ 2.6%
Other brand news ∆-2.6%
Political orientation ∆-0.7%
Advertising relationship ∆-0.9%
Selective advertising partnership ∆-7.8%
Notes: Increase in news selection variable by 2 standard deviations or set to 1 for respective category.
-537m $ (-∆216m $)
-435m $ (-∆114m $)
-567m $ (-∆246m $)
-747m$ (-∆426m $)
-233m $ (+∆88m $)
)
-297m $ (+∆24m $)
-290m $ (+∆31m $)
-407m $ (-∆86m $)
not meaningful
Data from analyzing 1,053 CSI events