October 10, 2016, 11:00–12:15
Toulouse
Room MS 003
Environment Economics Seminar
Abstract
We develop a theory of constrained communication about corporate social behavior between a NGO and an imperfectly informed stakeholder. We seek to understand when and why the NGO reveals socially-beneficial activities (good news) or socially detrimental ones (bad news). The model provides two main insights: 1) In a given situation, the NGO falls into the extremes, emitting either good news only or bad news only; 2) the more severe the communication constraint (limited resources, airtime, or stakeholder attention), the more likely the NGO emits bad news. We then provide evidence supporting our theory in an extensive panel data set of news published by 634 NGOs between 2002 and 2014.