Finance Research Seminar – Professor Gonul Colak

Title: Media as a Reinforcer of ESG Regulatory Risk: Evidence from Supply Chains

Date: 13 November 2024

Time: 11:30 – 12:30

Venue: FDC.1.18

If you would like to attend, please register using the following link:

Media as a Reinforcer of ESG Regulatory Risk: Evidence from Supply Chains

Speaker:  Professor Gonul Colak, University of Sussex

Gonul Colak is a Professor of Accounting and Finance at University of Sussex Business School. He also holds a fractional professorship at Department of Finance at Hanken School of Economics. Recently, he was a visiting scholar at Stern School of Business in New York University, Fordham University, and Turkish Central Bank’s Istanbul School of Central Banking in Turkey. Previously he held academic positions at Florida State University and Wichita State University. Gonul Colak served as the chairman of the Graduate School of Finance (GSF) in Finland and was a member of the board in the Nordic Finance Network (NFN). He served as the director of the PhD program in finance at Hanken School of Economics. He is currently a member of the international advisory board of the Business School of Sebelas Maret University in Indonesia. He currently serves as an associate editor in Journal of Financial Stability. Gonul has publications in high-quality journals such as Journal of Financial Economics, Review of Financial Studies, Journal of Financial and Quantitative Analysis, Review of Accounting Studies, Journal of Financial Intermediation, and Journal of Corporate Finance. According to Scopus his published work has been cited around 1000 times, some of which are in high impact journals.

Abstract:

Amid rising regulatory scrutiny of ESG practices along the supply chain, supplier ESG risk has become a critical factor for downstream firms, yet information asymmetry persists. This study analyzes the effect of negative environmental media coverage on procurement decisions using data from 495 major Chinese newspapers from 2001 to 2021. We observe significant reductions in purchases from suppliers negatively portrayed, especially after the 2015 Paris Agreement and from state-owned media. Coverage from state outlets also leads to more regulatory actions, indicating a regulatory risk channel affecting supply chain strategies. Our analysis shows that the impact of media is stronger with high-circulation outlets, severe reports, minimal bias, robust governance, and lower switching costs. This study underscores the role of media, particularly state-owned, in driving corporate accountability in ESG practices within supply chains.