An Integrated Perspective for Reappraising Effects of Word-of-Mouth Communication of Negative Corporate Publicity and Consumer Status: An Abstract

Abstract

Negative publicity and the company’s response to it are among the most critical factors affecting consumers’ buying decisions (Advertising Age 1995). Because corporate publicity is considered one of the most credible sources of information, it has more influence than other means of communications (Bond and Kirshenbaum 1998). The Association of Certified Fraud Examiners (2016) in recent research estimated that the overall cost of corporate negative publicity to businesses globally is 5% of annual revenue. Furthermore, consumers are more sensitive to negative information as opposed to positive information (Fiske 1980). As of now, theoretical framework for how consumers respond to negative publicity and the mechanisms for optimizing strategies to offset the negative effects are inconclusive. Kroloff (1988) compared the impact of negative and positive media exposure and found that negative publicity has a larger impact on corporate brand image than positive news. Some literature studies find that consumers respond in a homogeneous manner to negative publicity (Pearson and Mitroff 1993).