When the Headlines Fade, the Story Goes On: Investigating How Local Newspaper Decline Affects Firm CSR Engagement

Abstract

We investigate how the decline of local newspapers affects firms’ corporate social responsibility (CSR) engagement. Historically, local newspapers have shaped firms’ informational environments by providing two interconnected functions that influence local stakeholders’ perceptions: external monitoring and enhanced visibility of corporate behaviors. Their decline weakens both functions simultaneously, creating uncertainty about how firms adjust behaviors sensitive to scrutiny and public recognition. We develop a contingency framework explaining how firms respond to this dual erosion depending on the broader informational environment. We theorize that nonlocal informational intermediaries—national newspapers, financial analysts, and credit rating agencies—shape whether firms continue to experience credible accountability pressures or opportunities for public visibility, and that firms respond differently to local newspaper decline based on the availability of these intermediaries. When such intermediaries remain active, firms face sustained evaluative scrutiny and retain channels through which CSR activities can be communicated, increasing the strategic value of CSR. When they are absent, diminished oversight and limited visibility reduce both the pressures and incentives to maintain CSR, making retrenchment more likely. Interviews with journalists and corporate executives contextualize and refine the proposed mechanisms by illustrating how firms interpret the erosion of local oversight and visibility and navigate evolving informational ecosystems. Using a staggered difference-in-differences design exploiting local newspaper declines across U.S. counties from 1996 to 2014, we find evidence consistent with these heterogeneous responses. Our theory advances understanding of how firms strategically adapt their CSR engagement to evolving informational environments. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2024.18968 .