Media reach and the market reaction to negative ESG media stories: do industry affiliation and ESG performance matter?

Using an event study of U.S.-listed firms, we examine how media reach conditions the stock market reactions to adverse environmental, social, and governance (ESG) news across firms with different ESG performance and industry affiliations. On average, we find that a one-unit increase in media reach is associated with a decrease of 0.13 percentage points in cumulative abnormal returns, indicating an economically meaningful valuation effect. Further analysis shows that this effect is mainly concentrated among low-ESG firms in controversial industries. For high-ESG firms in these industries, media reach makes stock price declines significantly less severe than for low-ESG firms, indicating a media reach insurance effect. However, unless adverse news receives the highest-reach media coverage, we do not find evidence that high ESG performance provides an overall insurance effect. By identifying media reach as a key moderator, this study refines the ESG insurance hypothesis and clarifies when markets value ESG performance.