Name
Shifting the Spotlight: Do Firms Change Their Advertising Strategies after ESG Reputational-Damaging Events?
Date & Time
Monday, July 6, 2026, 10:40 AM - 11:05 AM
Description
This study uses granular data on firms’ advertising expenditures to examine how firms adjust advertising spending following ESG incidents across local markets. We find that firms on average reduce advertising immediately after ESG incidents, consistent with a visibility reduction strategy aimed at managing negative stakeholder perceptions. These reductions are concentrated in environmental and social (E&S) incidents and are stronger in regions with higher E&S sensitivity. Further analyses show that reductions are not driven by efforts to address underlying E&S issues but instead reflect a tactical reallocation of advertising expenditures away from high-sensitivity regions to low-sensitivity regions. The negative valuation effects of E&S incidents are significantly mitigated when firms reduce advertising spending in the month following the incidents. We also find spillover effects, as firms cut advertising when their suppliers or product-market peers experience E&S incidents. Our findings uncover a complex corporate visibility strategy varying across geographic market and over time.
Speakers
Keywords
ESG Incidents; ESG Practices; Visibility; Attention; Advertising; Corporate Strategy; Spillover Effects
Theme
CSR
Author 1
Tinghua Duan
Author 2
Frank Weikai Li
Author 3
Rencheng Wang
Author 4
Yin Wang