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

See all articles by Vivek Astvansh

Vivek Astvansh

Kelley School of Business, Indiana University; Luddy School of Informatics, Computing, and Engineering

Yen-Yao Wang

Auburn University

Wei Shi

University of Miami

Date Written: August 3, 2022

Abstract

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

Suggested Citation

Astvansh, Vivek and Wang, Yen-Yao and Shi, Wei, The Effects of the News Media on a Firm’s Voluntary Product Recalls (August 3, 2022). Production and Operations Management, Forthcoming , Available at SSRN: https://ssrn.com/abstract=4180608

Vivek Astvansh (Contact Author)

Kelley School of Business, Indiana University ( email )

Kelley School of Business
Bloomington, IN 47405
United States

HOME PAGE: http://kelleyschool.iu.edu/astvansh

Luddy School of Informatics, Computing, and Engineering ( email )

700 N. Woodlawn Avenue
Bloomington, IN 47408
United States

HOME PAGE: http://https://luddy.indiana.edu/contact/profile/index.html?Vivek_Astvansh

Yen-Yao Wang

Auburn University ( email )

415 West Magnolia Avenue
Auburn, AL 36849
United States

Wei Shi

University of Miami ( email )

Coral Gables, FL 33124
United States

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