Abstract
Firms have incentives to make a positive impression on externals, such as investors or customers. Prior research assumed that firms pursue impression management isolated from competing firms. However, firms may not necessarily strive after making the best possible impression. What matters instead is the relative comparison with their competitors. In this paper, we argue that firms manage impression relative to their competitors and they time their negative disclosures, such as product recalls, depending on competitors’ disclosures. Using data on product defects and recalls in the US automotive industry, we find evidence that firms seize competitors’ negative disclosures as an opportunity to bury their own negative news.
Published Version
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