Event and Core Stigma in Corporate Scandals

Abstract

This paper argues that event and core stigma play an important role in shaping how the media cover corporate scandals. We utilize a novel dataset of 200 corporate scandals to analyze the interaction of different forms of stigma and corporate responses as well as their effects on scandal-related media coverage. As the dataset covers the period of 1988 to 2017, we are able to provide a dynamic and contextualized picture of how event and core stigmas affect the extent, length, and peak of media coverage. Our findings point to distinct roles for both core and event stigma in shaping media attention to a corporate scandal. Counterintuitively, we consistently find corporate scandals that are characterized by high levels of stigmatization to be associated with lower levels of media coverage. We attribute this pattern to the fact that a scandal linked to a stigmatized organization confirms existing preconceptions regarding the deep-seated flaws that characterize this organization. For non-stigmatized organizations, we find the choice of response strategy of denial to aggravate media coverage relative to a strategy of accommodation, whereas this pattern does not hold to the same extent for stigmatized organizations.