10 Pages Posted: 13 Apr 2014 Last revised: 2 Jul 2014
Date Written: April 14, 2014
On March 5, biotechnology company Chimerix refused to provide a potentially life-saving drug to 7-year old Josh Hardy who was battling cancer. The drug had not yet received FDA approval, and the company had discontinued its "compassionate use" program to dedicate resources to Phase 3 testing of the drug.
Five days later, following a massive social media onslaught that captured national attention, the company relented.
In this Closer Look, we dissect the powerful force of social media and examine its potential impact on corporate reputation. We ask:
1. Why aren’t more companies prepared to deal with the reputational risks that emerge through online channels?
2. How should information gathered from social media outlets be used to supplement a comprehensive risk management program?
3. Are stories such as this one a board-level issue? If so, at what point do they become one?
4. If Chimerix were your company, what would you do differently?
The Closer Look series is a collection of short case studies through which we explore topics, issues, and controversies in corporate governance and executive leadership. In each study, we take a targeted look at a specific issue that is relevant to the current debate on governance and explain why it is so important. Larcker and Tayan are co-authors of the books Corporate Governance Matters and A Real Look at Real World Corporate Governance.
Keywords: social media, social media monitoring, social media risks, corporate risk management, reputational risks, corporate governance
JEL Classification: G10, G11, G12, G14, L14, Z10
Suggested Citation: Suggested Citation
Larcker, David F. and Larcker, Sarah M. and Tayan, Brian, Josh Hardy and the #SaveJosh Army: How Corporate Risk Escalates and Accelerates Through Social Media (April 14, 2014). Rock Center for Corporate Governance at Stanford University Closer Look Series: Topics, Issues and Controversies in Corporate Governance and Leadership No. CGRP-40 . Available at SSRN: https://ssrn.com/abstract=2424451