Shock Events - Examining the Effects of Firm Responsibility, Crisis Response Communication and Reputation-repair Actions on Shareholder Value
Abstract
This study examines a unique hand-collected database of ninety-six significant and unexpected (shock) events to examine the following research questions: i. Is there a relationship between a company's attributed level of responsibility for an event and the magnitude of its reputational losses? ii. Does a company's adherence to a crisis-response framework help to mitigate reputational losses? iii. Does a company's announcement of reputation-repair actions help to mitigate reputational losses, and does the number, and the number of different types of company-announced reputation-repair actions vary with a company's attributed responsibility for the event? This study extends the literature on the shareholder effects of shock events and is unique in utilizing events with a full continuum of attributed-firm responsibility and in examining how a company's adherence to a crisis-response framework helps to mitigate reputational losses. This also study extends the literature on the shareholder effects of reputation-repair actions and is unique in examining these effects with a sample of events with a full continuum of attributed-firm responsibility. The results of this study reveal a significant relationship between a company's attributed level of responsibility for an event and the magnitude of its reputational losses. The results also reflect that while communication appears to mitigate reputational losses, the relationship of a firm's adherence to a crisis-response framework and the level of recovery was not significant. Finally, the results of the study show that significant relationships exist between both the number and the number of different types of reputation-repair actions that firms announce and their attributed level of responsibility for the event, and that such announcements help to significantly mitigate reputational losses.
Subject Area
Finance|Accounting|Management
Recommended Citation
Buzinkai, Donald I, "Shock Events - Examining the Effects of Firm Responsibility, Crisis Response Communication and Reputation-repair Actions on Shareholder Value" (2019). ETD Collection for Pace University. AAI22585391.
https://digitalcommons.pace.edu/dissertations/AAI22585391
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