Science News
from research organizations

How social media can help, hurt companies during product recalls

Date:
February 18, 2015
Source:
Wiley
Summary:
Companies are starting to embrace social media as a viable disclosure channel for product recalls, with the goal of limiting and repairing damage to the firms' reputation. Using a sample of 405 consumer product recalls between 2000 and 2012, researchers found that corporate social media, in general, lessens negative price reactions to product recall announcements.
Share:
FULL STORY

Companies are starting to embrace social media as a viable disclosure channel for product recalls, with the goal of limiting and repairing damage to the firms' reputation. Using a sample of 405 consumer product recalls between 2000 and 2012, researchers found that corporate social media, in general, lessens negative price reactions to product recall announcements. However, as social media evolved from less to more interactive channels, firms have lost complete control over the content appearing on their corporate social media, and the benefits of social media have lessened.

As reported in a Journal of Accounting Research study, the investigators also found that increased frequency of tweets by other users exacerbates negative market reactions as disgruntled users interject negative sentiment into the online dialogue, while increased frequency of tweets by the firm lessens negative market reactions.


Story Source:

Materials provided by Wiley. Note: Content may be edited for style and length.


Journal Reference:

  1. LIAN FEN LEE, AMY HUTTON, SUSAN SHU. The Role of Social Media in the Capital Market: Evidence from Consumer Product Recalls. Journal of Accounting Research, 2015; DOI: 10.1111/1475-679X.12074

Cite This Page:

Wiley. "How social media can help, hurt companies during product recalls." ScienceDaily. ScienceDaily, 18 February 2015. <www.sciencedaily.com/releases/2015/02/150218141423.htm>.
Wiley. (2015, February 18). How social media can help, hurt companies during product recalls. ScienceDaily. Retrieved May 23, 2017 from www.sciencedaily.com/releases/2015/02/150218141423.htm
Wiley. "How social media can help, hurt companies during product recalls." ScienceDaily. www.sciencedaily.com/releases/2015/02/150218141423.htm (accessed May 23, 2017).

RELATED STORIES