For strings, like in your example, it's fine. Some people may think it could get confusing if you're trying to debug and log that variable to the console sometime after it's been changed, but that's mostly subjective. Use your best judgement.
For objects, which are always passed by reference, you should avoid making changes in the function because those changes will still be present outside the function as well.
E.G.:
var myObject = {
message: "Hello, world"
};
function alertMessage(msgObj){
msgObj.message = "Hello moto";
alert(msgObj.message);
}
alertMessage(myObject);
// The object has changed.
console.log(myObject);