CEOs Causing Corporate Crisis: A Consumer-Based Perspective

Breberina, Jovica Milan und Schwaiger, Manfred (1. January 2015): CEOs Causing Corporate Crisis: A Consumer-Based Perspective. In: Academy of Management Proceedings, No. 1: p. 18320

Abstract

In this research, we highlight the role of negative information about the chief executive officer (CEO) as critical influence on brand performance by investigating the unexplored effect of CEO misbehavior. The increasing connection between corporate and CEO image allows negative CEO publicity to create amplified distress for the affected company, damage its reputation and impair the relationship with its stakeholders. This paper seeks to quantify the magnitude and dynamic effects of CEO scandals on consumers’ brand perceptions by means of an event study and successive panel model, integrating the influence of time and media coverage among others. Using real world data (YouGov Brand Index), we found "wear-in" (i.e., it takes only a few days before the Brand Index values reach a local minimum) and "wear-out" (i.e., it takes two weeks before the impact of the CEO scandal dies out again) effects for CEO misbehaviors. Furthermore, whereas time offers a healing effect, ongoing media coverage of the CEO misbehavior was found to fuel the brand performance decrease. Overall, these findings offer some unique implications for brand managers and advance current research on negative information processing, corporate crisis and brand performance.

• Item Type: Journal article
• Form of publication: Publisher's Version
• Keywords: brand performance; CEO; corporate crisis
• Faculties: Munich School of Management > Institute for Market-based Management
• Subjects: 300 Social sciences > 330 Economics
• Language: English