Abstract
This study draws upon media agenda‐setting theory toinvestigate the relationship between negative mediacoverage around environmental, social, and governance(ESG) issues and the quality of integrated reporting (IR).In particular, we examine the top 100 South Africanlisted companies in the 2013–2018 timeframe for 317firm‐year observations. Our results reveal that IR qualityis positively related to negative ESG media coverage.Thus, a company exposed to more media pressure issueshigher‐quality IR consistent with its need to facescrutiny and potential reputational damage and torestore or maintain its legitimacy. Results are robust todifferent measures of negative ESG media coverage,controlling for ESG disclosures, and are confirmed byanalyses aimed at addressing endogeneity (instrumentalvariable approach, firm‐fixed effects, and matchedsamples). Subsample analyses show that financial sectorreputational concerns do not impact our results.Additional tests show no long‐term effects of negativemedia coverage on IR quality and that sustainabilityembeddedness alleviates a company's response tonegative ESG news in terms of enhanced reporting.
NETL
NSTL
Wiley