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Media type:
E-Book
Title:
Investors’ Responses to Management Getting Out Ahead of Negative Media Mentions
:
The Moderating Effects of the Issue’s Importance and Management’s Action Plan
Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 20, 2020 erstellt
Description:
We investigate the effects of management's strategic disclosure choices when a company is faced with the prospect of a negative media mention. Crisis communications experts commonly advise managers to get out ahead of the media to increase management's credibility. We use an experiment to examine how investors' responses to management getting out ahead of a negative media mention is moderated by the importance the media gives the issue, and by management's action plan. When the media gives the issue more importance, we find that investors form lower judgments of management's credibility and of the company as an investment when management gets out ahead of, compared to responds after, the media with a plan to change course to control the issue. However, we find that investors form higher judgments of management's credibility and of the company as an investment when management gets out ahead of the media with plans to stay the course, rather than change the course. When the media gives the issue less importance, we find that investors' judgments are not sensitive to management's strategic disclosure choices that we examine. Our study contributes to practice and to theory by documenting that investors' responses to a strategy to get out ahead of a negative media mention jointly depends on the importance the media gives to the issue and management's action plan to address the issue