The Effects of the News Media on a Firm’s Voluntary Product Recalls
Production and Operations Management, Forthcoming
50 Pages Posted: 9 Aug 2022 Last revised: 15 Aug 2022
Date Written: August 3, 2022
Does the news media’s reporting of the safety (or the lack thereof) in a firm’s products impact managers’ voluntary recalls of the products? The current article empirically answers this question in the context of safety defects in vehicles of 22 manufacturers from June 2009 to December 2020 in the United States. Results show that the volume of news reports about safety in a manufacturer’s products increases voluntary recalls by managers. Further, the negativity in these news reports strengthens the main effect of news volume, whereas news positivity does not moderate the main effect. Lastly, the media’s rating of the manufacturer’s products weakens the news volume effect, thus acting as a buffer. The supplementary analysis demonstrates that none of the main or moderation effects exist for involuntary recalls, confirming the theory that news affects managers’ voluntary behavior. Lastly, the effects exist for high (and not low) severity voluntary recalls only. The findings unearth the news media’s role in enhancing public safety by affecting managerial decisions about recalls.
Keywords: News, product recalls, negativity, positivity, quality, safety
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