In a crisis managers are confronted with a dilemma between an ethical responsibility to respond to victims and their fiduciary responsibility to protect shareholder’s wealth. This study provides empirical evidence that a company apology made during a crisis can have a positive or negative effect on stock price depending on the level of responsibility for a crisis born by the firm. We use Coombs’ (2007) Situational Crisis Communication Theory to classify crises and appropriate re-sponse type for 235 unique crises between 1983 and 2013. We use event study methodology to study the effect of an apology on returns. The results show that managers apologizing to those affected for a victim or accidental crisis jeopardize shareholder wealth; however offering an apology for a preventable crisis offsets this negative effect.
| Identifer | oai:union.ndltd.org:USASK/oai:ecommons.usask.ca:10388/ETD-2014-08-1643 |
| Date | 2014 August 1900 |
| Contributors | Racine, Marie, Wilson, Craig |
| Source Sets | University of Saskatchewan Library |
| Language | English |
| Detected Language | English |
| Type | text, thesis |
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