ESG performance, media coverage and brand value

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Abstract
Purpose: The performance of corporations in sustainable development is not only a concern of investors, but has also captured ever-increasing attention from consumers. However, the evidence on how these good practices would ultimately benefit brands economically remains insufficient. This study tests the causal effect between corporate Environmental, Social, and Governance (ESG) performance, media coverage, and brand value to reveal the underlying mechanisms of how consumers would react to high ESG performance.Design/methodology/approach: This study uses panel data regression analysis with a sample of Chinese A-share non-financial listed companies from 2010 to 2021. ESG performance, brand value, and media coverage are assessed with Huazheng ESG Rating, the rankings from the China’s 500 Most Valuable Brands' list published by the World Brand Lab, and media index compiled by the Chinese Research Data Services Platform (CNRDS) respectively.Findings: This research confirmed that ESG performance positively impacted brand value in terms of profitability, and that media coverage played a role as a megaphone in this relationship. Large-scale corporates, compared to small ones, benefited more from good ESG ratings due to increased media coverage.Originality/value: The findings provide evidence of the megaphone effect of media coverage on the relationship between firms’ ESG engagements and brand value in the product market, which has extended the knowledge of media’s monitoring role in the financial market. And this megaphone effect is strengthened by firm size in which larger firms have spotlight effect in draw public attention due to higher expectations in terms of social responsibility.

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