Stock market reaction to product-harm crisis response strategies

Sujuan Zheng, Guangqing Yang and Shuhan Chen

PLOS ONE, 2023, vol. 18, issue 8, 1-15

Abstract: Product-harm crises have detrimental effects on firm’s sales, reputation, and financial value, requiring crisis managers to promptly adopt appropriate response strategies to mitigate these impacts. Situational Crisis Communication Theory (SCCT) guides managers to align responsibility attribution with response strategies. Using Chinese listed firms’ product-harm crises sample from 2015 to 2021, this study analyzes the stock market’s reaction to different response strategies. The event study method reveals that a passive strategy is more effective during the disclosure stage, and accept+no recall and deny+recall are conforming strategies during the initial response stage. Additionally, firms with a crisis history should assume greater responsibility when developing response strategies for product-harm crises, as crisis history amplifies negative effects. The results provide recommendations to help managers formulate appropriate strategies.

Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0290548 (text/html)
https://journals.plos.org/plosone/article/file?id= ... 90548&type=printable (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0290548

DOI: 10.1371/journal.pone.0290548

Access Statistics for this article

More articles in PLOS ONE from Public Library of Science
Bibliographic data for series maintained by plosone ().