Are Firms Penalized for Their Involvement in Human Rights Violations?

Peter‐Jan Engelen, Liesbeth Enneking, Annika van Baar and Judith van Erp

Corporate Social Responsibility and Environmental Management, 2025, vol. 32, issue 6, 8353-8368

Abstract: Increased transparency about harmful corporate human rights practices is often assumed to contribute to the prevention of such violations, as negative publicity may generate reputational damage for corporations. However, whether and when such reputational damage actually occurs, and in what shape, is unknown. We use an event study design to investigate stock market reactions to announcements of accusations of corporate human rights violations. We test whether differences in media coverage, a clear focus on blame, concurrent NGO involvement, and social media coverage explain variation in the stock market's reaction to the announcement of a corporate human rights violation. Our study finds no stock market effects for accusations of corporate human rights violations. This study concurs with previous findings questioning the reputational damage for corporate social irresponsibility.

Date: 2025
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https://doi.org/10.1002/csr.70139

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Persistent link: https://EconPapers.repec.org/RePEc:wly:corsem:v:32:y:2025:i:6:p:8353-8368

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