CSR Disclosure and Corporate Reputation: Evidence from Firms’ Facebook Communication

Abstract

This paper examines the impact of firms’ dissemination of corporate social responsibility (CSR) disclosure through Facebook on corporate reputation. We investigate this relationship empirically in the German setting by using a corporate reputation index that tracks the general public’s perceptions of corporate reputation over time. Using firms’ discretionary use of Facebook to communicate CSR information, we find that firms posting single or multiple CSR information experience a decrease in corporate reputation. More specifically, this effect becomes larger with time. Additional analyses indicate that non-professional stakeholders perceive reputation as being lower if a firm increases the number of CSR postings suggesting a diluting effect if CSR communication is high (quantity effect). However, if we differentiate postings based on whether their content relates to an environment, social or economic activity of a firm, we find a positive effect on reputation for firms posting environmental information (quality effect). Also, only firms with an above-average amount of earned media attention, as well as “Likes”, “Comments”, and “Shares” experience a significant decrease in corporate reputation with an increase in the number of CSR posts. Overall, findings suggest that non-professional stakeholders perceive social and economic activities related to CSR as a greenwashing tool with a doubtable sustainable impact. Only additional photos can turn over this negative effect with an increase in the number of CSR postings as such having a positive effect on corporate reputation possibly providing evidence to the non-professional stakeholders that a sustainable activity stays behind the verbal posting.