The next Entrepreneurship and Innovation Policy Research virtual seminar is Wednesday, September 6, from 11:00-12:15 ET. Johanna Glauber (Instituto de Empresa) will present "Safety in precedence: The strategic timing of bad news" (with Julien Jourdan, HEC). Anastasiya Zavyalova (Rice University) will discuss. Click HERE to register for the 9/6 seminar. We hope you join us.
Please visit this LINK to view and register for upcoming Fall seminars.
- Tim Folta (UCONN), Maryann Feldman (ASU), and Supradeep Dutta (Rutgers U)
Abstract: Prior work documents how firms may release bad news when a series of associated events at competitor firms distracts stakeholder audiences. We explore a related yet distinct impression management mechanism: firms may leverage the well-documented reputational contamination created by the disclosure of negative information about a competitor. We argue that a temporary decrease in stakeholders' expectations may create safety in precedence, allowing firms to announce negative news at a reduced cost. We test this argument using unique data on defect discovery and product recalls in the US automotive industry. Our findings support the view that firms strategically time the disclosure of product recalls leveraging safety in precedence. We discuss the implications of our results for research on impression management and product recalls.
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TimothyFolta
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