Investors’ Responses to Management Getting Out Ahead of Negative Media Stories: The Moderating Effects of Management’s Action Plan and the Media’s Focus

https://doi.org/10.2308/JFR-2019-0011

Posted: 20 Jun 2015 Last revised: 22 Oct 2021

See all articles by Deni Cikurel

Deni Cikurel

DePaul University

Kirsten Fanning

DePaul University

Kevin E. Jackson

University of Illinois at Urbana-Champaign - Department of Accountancy

Date Written: June 9, 2021

Abstract

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 story are moderated by management’s action plan and the media’s focus on the company. When the company is the focus of the media’s lede, investors respond more negatively when the company gets out ahead of the media with plans to change, instead of stay, the course to handle the negative issue. Yet, investors respond more positively when the company responds after the media with plans to change, instead of stay, the course. In contrast, when the media does not focus on the company in its lede, but instead only mentions the company in the story, we find that investors’ responses are not sensitive to management’s strategic disclosure choices that we examine.

Keywords: media; management disclosure; management credibility; investor judgment

Suggested Citation

Cikurel, Deni and Fanning, Kirsten and Jackson, Kevin, Investors’ Responses to Management Getting Out Ahead of Negative Media Stories: The Moderating Effects of Management’s Action Plan and the Media’s Focus (June 9, 2021). https://doi.org/10.2308/JFR-2019-0011, Available at SSRN: https://ssrn.com/abstract=2620304 or http://dx.doi.org/10.2139/ssrn.2620304

Deni Cikurel

DePaul University ( email )

1 East Jackson Blvd. Suite 6000
Chicago, IL 60604
United States
3123627366 (Phone)

Kirsten Fanning (Contact Author)

DePaul University ( email )

1 East Jackson Blvd.
Suite 6048
Chicago, IL 60604
United States
312-362-1436 (Phone)

Kevin Jackson

University of Illinois at Urbana-Champaign - Department of Accountancy ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
2,513
PlumX Metrics