The Price of Losing Trust: An Empirical Analysis of Social Misconduct by YouTube Creators

31 Pages Posted: 10 Mar 2022 Last revised: 25 Sep 2023

See all articles by Rajiv Garg

Rajiv Garg

Goizueta Business School, Emory University

Jeong Ho (John) Kim

Florida State University - Department of Finance

Sung Kwan Lee

Chinese University of Hong Kong, Shenzhen

Date Written: September 24, 2023

Abstract

We examine the consequences of reported social misconduct by YouTube creators. Prior literature suggests that such creators may benefit from negative marketing: exposure of their social misconduct can induce negative word-of-mouth, which in turn increases the virality of their content. However, we show that, overall, the opposite effect prevails. Utilizing a staggered difference-in-differences approach, we find that YouTube channels associated with creators exposed of social misconduct experience significant drops in subscribers and viewership, which translate to economically significant losses ranging from $4,768 to $8,292 per month per channel. These effects are similar for channels featuring products and those that do not, with a more pronounced impact on channels where creators can be visually identified. We also find that these consequences, driven by a loss of customer trust, can be partially mitigated through credible online apologies.

Keywords: social misconduct, online trust, gig economy, online apology, YouTube creators

JEL Classification: D91, G30, M14

Suggested Citation

Garg, Rajiv and Kim, Jeong Ho and Lee, Sung Kwan, The Price of Losing Trust: An Empirical Analysis of Social Misconduct by YouTube Creators (September 24, 2023). Available at SSRN: https://ssrn.com/abstract=4007706 or http://dx.doi.org/10.2139/ssrn.4007706

Rajiv Garg

Goizueta Business School, Emory University ( email )

1300 Clifton Road
Atlanta, GA 30322
United States

HOME PAGE: http://www.rajivgarg.org

Jeong Ho Kim (Contact Author)

Florida State University - Department of Finance ( email )

Tallahassee, FL 32306-1042
United States

Sung Kwan Lee

Chinese University of Hong Kong, Shenzhen ( email )

2001 Longxiang Road
Longgang District
Shenzhen, Guangdong
China

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