Navigating through crisis: an empirical investigation of effective response strategies for reputation restoration

Shuhan Chen, Guangqing Yang and Qian Han

The European Journal of Finance, 2024, vol. 30, issue 14, 1614-1641

Abstract: We examine the effectiveness of response strategies in repairing reputational damage using 242 crisis events for Chinese listed companies between 2015 and 2021. Our results indicate that minimization and correction strategies effectively restore a company’s reputation after a crisis, and the effectiveness of an apology strategy is heightened when a company bears primary responsibility. In contrast, the transfer strategy is ineffective and may worsen the damage, especially during a serious crisis. Additionally, in a positive social trust environment, the minimization strategy is more effective for restoring the reputation of companies experiencing significant harm than other strategies. These findings are informative for crisis managers in selecting appropriate response strategies for reputation repair.

Date: 2024
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DOI: 10.1080/1351847X.2024.2328212

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