Managing Negative Celebrity Endorser Publicity: How Announcements of Firm (Non)Responses Affect Stock Returns

• 成果类型: Article
• 署名作者: Hock, Stefan J.; Raithel, Sascha
• 署名单位: University of Connecticut; Free University of Berlin
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2018.3243
• 发表日期: 2020
• 页码: 1473-1495
• 关键词: celebrity endorsement; negative publicity; scandal; Crisis management; firm reaction; event study; stock return

摘要

Celebrity endorsers can cause negative publicity that can spill over to the endorsed brand. However, little is known about the economic effects of firm reactions to these events. This study fills this gap and estimates how announcements of firms' reactions (yes versus no), timing (slow versus fast), and type (maintain/suspend versus no reaction) affect daily abnormal stock returns (ARs) following negative publicity. Using 128 events of negative endorser publicity between 1988 and 2016 affecting firms in 230 cases, this study offers new and economically relevant insights. The most surprising finding is that firms can gain value depending on their response. Announcements of firms' reactions positively affect ARs, especially if they occur quickly after negative publicity surfaces. The analyses reveal that fast (slow) announcements of firms' reactions increase (decrease) firm value by 2.10% (-1.88%) over the next four trading weeks. Results also show that issuing statements suspending or maintaining the endorser both yield more positive ARs than not reacting at all. Further analyses identify conditions under which the stock market rewards maintaining or suspending an endorser. Firms have more positive ARs when they (1) suspend higher-blame endorsers, (2) suspend endorsers whose negative publicity is related to their occupation, (3) maintain endorsers with a high product fit, and (4) do not suspend apologetic endorsers. This study discusses implications for theory and practice and provides a strong empirical foundation for understanding the consequences of firm reaction announcements to negative celebrity endorser publicity.