Effects Of Explanations Communicated In Announcements Of Alleged Labor Abuses On Valuation Of A Firm’s Stock

ASU Author/Contributor (non-ASU co-authors, if there are any, appear on document)
Richard W. Pouder PhD, Professor (Creator)
Appalachian State University (ASU )
Web Site: https://library.appstate.edu/

Abstract: The purpose of this paper is to gauge the impact of the following on the share price of a firm that has allegedly committed labor abuses: the allegation itself, explanations (justifications and excuses) offered by the company spokesperson, and denials of responsibility for the alleged abuse. The study uses archival data and an event study methodology. Labor abuse allegations have a negative impact on the firm's share price. Allegations that are accompanied by an explanation (a justification or excuse) have a less negative impact than those that are not accompanied by an explanation. Denials of responsibility have a negative influence on the share price. If managers want to avoid a negative hit on the share price from an allegation of wrongdoing, they should provide an explanation (a justification or excuse) and avoid the use of denials.

Additional Information

Daly, J. P., Pouder, R. W., & McNeil, C. R. (2017). Effects of explanations communicated in announcements of alleged labor abuses on valuation of a firm's stock. Corporate Communications, 22(1), 93-112. Retrieved from https://login.proxy006.nclive.org/login?url=https://search.proquest.com/docview/1857567608?accountid=8337. Publisher version of record available at: https://www.emeraldinsight.com/doi/full/10.1108/CCIJ-11-2015-0070
Language: English
Date: 2017
Event studies, Explanations, Social accounts, Stakeholder impression management, Third party fairness judgments

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