Mass Media Effects on Non-Governmental Organizations

Globalization has raised concerns that multinational companies develop commercial activities at the expense of the environment or human rights, especially in developing countries. This paper studies the communications strategies and the effectiveness of nongovernmental organizations (NGOs) in their monitoring of multinational firms’ practices. We make use of large media shocks, generated by big sports events, that decrease media coverage of firms’ practices in event host countries, and increase coverage of firms that sponsor these events. We find NGOs to respond consistently to this change in media coverage. Specifically, NGOs are more likely to disseminate information about firms sponsoring sports events, and are less likely to bring attention to firms operating in the countries hosting the events. We also find that NGOs take advantage of big sports events to increase their impact on sponsoring firms, since bad reports from NGOs about sponsors trigger a stronger negative reaction in the stock market.