Mass media effects on non-governmental organizations

Globalization has raised concerns that multinational firms develop commercial activities at the expense of the environment or human rights, especially in developing countries. As firms' practices are not fully observable by stakeholders, NGOs have applied pressure on firms by organizing information campaigns. This paper studies how media coverage affects how effective NGOs are in monitoring firms. We make use of large media shocks, generated by big sports events, that crowd out media coverage of firms' practices in event host and participant countries, and increase coverage of sponsors. We find NGOs to respond consistently. NGOs are more likely to disseminate critical coverage of firms sponsoring sports events, and are less likely to spotlight firms' practices in the event host and participant countries. We also find that NGOs take advantage of sports events to increase their impact on sponsors, since campaigns about sponsors trigger a significant negative reaction in the stock market. (C) 2016 Elsevier B.V. All rights reserved.