Calls to Action: The Dangers of Negative CSR Information and Stakeholder Punishments

The purpose of this paper is to experimentally examine stakeholder punishments in response to poor CSR performance communicated through either internal or external channels. Across two experiments, we find that receiving negative CSR information communicated through internal channels (CSR reports) or external channels (news articles) causes individuals to punish a firm (less investment, lower employment interest, buy less, post negative comments on social media). Furthermore, we find sensitivity to a conflict of information from internal and external channels, which increased Calls to Action on social media. This is a concern for firms because such social media posts can elicit further punishments from stakeholders and inflict reputational costs on the firm. The findings of our studies suggest that firms should accurately report CSR performance, especially if external channels are likely to communicate negative CSR information regarding the firm because such conflicting information can elicit a strong online backlash.