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Influence of firm crisis self-disclosure on stock reaction: Empirical research based on 220 safety accident announcements of Chinese A-share listed firms

  • School of Management, University of Science and Technology of China, Hefei 230026, China

Cite this:
https://doi.org/10.3969/j.issn.0253-2778.2020.08.001
  • Received Date: 04 June 2020
  • Accepted Date: 16 June 2020
  • Rev Recd Date: 16 June 2020
  • Publish Date: 31 August 2020
    Abstract

  • Abstract

    Based on signal theory and situational crisis communication theory, the abnormal return rate and cumulative abnormal return rate of stocks were calculated by event study method, and the negative reaction process of stocks before and after firm crisis accident was verified. Here 220 safety accident announcements of Chinese A-share listed firms from 2007 to 2018 were collected and quantified as samples. In addition, based on stakeholders’ perception of environmental uncertainty, the multi-regression method was used to explore the process of stakeholders’ response to the self-disclosure of firm crisis. The empirical results show that within a short period after the announcement, stakeholders are more concerned about the loss of personnel, property damage and the response speed of firms. But after a long time, the negative stock reaction to the future uncertainty is stronger. Therefore, the sequence of stakeholders’ response to the self-disclosure of firm crisis is from influence uncertainty, response uncertainty to state uncertainty. The conclusion helps firms to make better use of crisis response strategies to reduce the damage and improve the ability of crisis communication.

    Abstract

    Based on signal theory and situational crisis communication theory, the abnormal return rate and cumulative abnormal return rate of stocks were calculated by event study method, and the negative reaction process of stocks before and after firm crisis accident was verified. Here 220 safety accident announcements of Chinese A-share listed firms from 2007 to 2018 were collected and quantified as samples. In addition, based on stakeholders’ perception of environmental uncertainty, the multi-regression method was used to explore the process of stakeholders’ response to the self-disclosure of firm crisis. The empirical results show that within a short period after the announcement, stakeholders are more concerned about the loss of personnel, property damage and the response speed of firms. But after a long time, the negative stock reaction to the future uncertainty is stronger. Therefore, the sequence of stakeholders’ response to the self-disclosure of firm crisis is from influence uncertainty, response uncertainty to state uncertainty. The conclusion helps firms to make better use of crisis response strategies to reduce the damage and improve the ability of crisis communication.
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    • References(37)
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    COOMBS W T. Protecting organization reputations during a crisis：The development and application of situational crisis communication theory[J]. Corporate Reputation Review，2007，10(3)：163-176.
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    DEEGAN C，RANKIN M，VOGHT P. Firms’ disclosure reactions to major social incidents: Australian evidence[J]. Accounting Forum，2000，24(1)：101-130.
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    周蓉龄，齐佳音. 危机UGC事件的企业微博信息采纳行为研究[J].情报杂志，2014，33(4)：128-134,138.
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    王雪芳，张红霞. 全行业危机下沟通策略的选择与消费者信任重建[J].管理学报，2017，14(9)：1362-1373.
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    王志良，宋洁琦.危机事件中公众认知机理与信息响应策略探究——基于危机演进阶段的视角[J].理论导刊，2015(4)：23-26.
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    MARCUS A A，GOODMAN R S. Victims and shareholders：Dilemmas of presenting corporate policy during a crisis[J]. The Academy of Management Journal，1991，34(2)：281-305.
    [24]
    ARPAN L M，POMPPER D. Stormy weather：Testing “stealing thunder” as a crisis communication strategy to improve communication flow between organizations and journalists[J]. Public Relations Review, 2003, 29(3)：291-308.
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    KAUFMANN J B，KESNER I F，HAZEN T L. The myth of full disclosure：A look at organizational communications during crises[J]. Business Horizons，1994，37(4)：29-39.
    [26]
    WEINSTEIN，NEIL D. Unrealistic optimism about future life events[J]. Journal of Personality and Social Psychology，1980，39(5)：806-820.
    [27]
    FAMA E F，FISHER L，JENSEN M C，et al. The adjustment of stock prices to new information[J]. International Economic Review, 1969，10(1)：1-21.
    [28]
    WALKER T J，THIENGTHAM D J，LIN M Y. On the performance of airlines and airplane manufacturers following aviation disasters[J]. Canadian Journal of Administrative Sciences，2005，22(1)：21-34.
    [29]
    BROWN S J，WARNER J B. Measuring security price performance[J]. Journal of Financial Economics，1980，8(3)：205-258.
    [30]
    ARPAN L M，ROSKOS-EWOLDSEN D R. Stealing thunder：Analysis of the effects of proactive disclosure of crisis information[J]. Public Relations Review，2005，31(3)：425-433.
    [31]
    COOMBS W T. Choosing the right words：The development of guidelines for the selection of the “appropriate” crisis-response strategies[J]. Management Communication Quarterly, 1995, 8(4)：447-476.
    [32]
    EPSTEIN L G，SCHNEIDER M. Ambiguity，information quality，and asset pricing[J]. The Journal of Finance，2008，63(1)：197-228.
    [33]
    DIESTRE L，RAJAGOPALAN N. Toward an input-based perspective on categorization：Investor reactions to chemical accidents[J]. Academy of Management Journal，2014，57(4)：1130-1153.
    [34]
    MARCUS A A，NICHOLS M L. On the edge: Heeding the warnings of unusual events[J]. Organization Science，1999，10(4)：482-499.
    [35]
    GERLOFF E A，MUIR N K，BODENSTEINER W D. Three components of perceived environmental uncertainty：An exploratory analysis of the effects of aggregation[J]. Journal of Management，1991，17(4)：749-768.
    [36]
    LYON L, CAMERON G T. A relational approach examining the interplay of prior reputation and immediate response to a crisis[J]. Journal of Public Relations Research, 2004，16(3)：213-241.
    [37]
    DUNCAN R B. Characteristics of organizational environments and perceived environmental uncertainty[J]. Administrative Science Quarterly, 1972, 17(3): 313-327.)
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    [1]
    CAPELLE-BLANCARD G，LAGUNA M A. How does the stock market respond to chemical disasters?[J]. Journal of Environmental Economics and Management，2010，59(2)：192-205.
    [2]
    COOMBS W T. Protecting organization reputations during a crisis：The development and application of situational crisis communication theory[J]. Corporate Reputation Review，2007，10(3)：163-176.
    [3]
    OUYANG Z，WEI J，ZHAO D. Stock market’s reaction to self-disclosure of work safety accidents: An empirical study in China[J]. Quality and Quantity，2016，51(4)：1-16.
    [4]
    DEEGAN C，RANKIN M，VOGHT P. Firms’ disclosure reactions to major social incidents: Australian evidence[J]. Accounting Forum，2000，24(1)：101-130.
    [5]
    SKINNER D J. Why firms voluntarily disclose bad news[J]. Journal of Accounting Research，1994，32(1)：38-60.
    [6]
    MILLIKEN F J. Three types of perceived uncertainty about the environment: State, effect, and response uncertainty[J]. Academy of Management Review，1987，12(1)：133-143.
    [7]
    ASHILL N J, JOBBER D. Measuring state, effect，and response uncertainty：Theoretical construct development and empirical validation[J]. Journal of Management，2010，36(5)：1278-1308.
    [8]
    BREDMAR K. Transforming environmental uncertainty to risk-managing risk and management control[J]. Global Business and Management Research，2015，7(3)：44-54.
    [9]
    SLOVIC P，LICHTENSTEIN S，FISCHHOFF B. Modeling the societal impact of fatal accidents[J]. Management Science，1984，30(4)：464-474.
    [10]
    BENEISH M D，BILLINGS M B，HODDER L D. Internal control weaknesses and information uncertainty[J]. The Accounting Review，2008，83(3)：665-703.
    [11]
    BIRD R，YEUNG D. How do investors react under uncertainty?[J]. Pacific-Basin Finance Journal，2012，20(2)：310-327.
    [12]
    HAMILTON J T. Pollution as news：Media and stock market reactions to the Toxics Release Inventory data[J]. Journal of Environmental Economics and Management，1995，28(1)：98-113.
    [13]
    COETZEE C M，VAN STADEN C J. Disclosure responses to mining accidents：South African evidence[J]. Accounting Forum, 2011，35(4)：232-246.
    [14]
    MAKINO R. Stock market responses to chemical accidents in Japan: An event study[J]. Journal of Loss Prevention in the Process Industries，2016, 44：453-458.
    [15]
    蔡雨坤. 危机沟通策略在企业危机传播中的应用——以“永和豆浆粉”事件为例[J].重庆邮电大学学报(社会科学版)，2013，25(2)：94-98,134.
    [16]
    赵定涛，李蓓. 企业危机管理五力模型分析[J].科技进步与对策，2005，22(4)：126-127.
    [17]
    周蓉龄，齐佳音. 危机UGC事件的企业微博信息采纳行为研究[J].情报杂志，2014，33(4)：128-134,138.
    [18]
    林如鹏，刘佩. “一带一路”愿景下中国企业海外形象传播的危机沟通策略[J].南京社会科学，2015(7)：6-13.
    [19]
    王雪芳，张红霞. 全行业危机下沟通策略的选择与消费者信任重建[J].管理学报，2017，14(9)：1362-1373.
    [20]
    XIE Y，PENG S. How to repair customer trust after negative publicity：The roles of competence，integrity，benevolence，and forgiveness[J].Psychology and Marketing，2009，26(7)：572-589.
    [21]
    陶红. 抢雷策略对品牌危机修复效果的影响研究[D].广州：暨南大学，2015.
    [22]
    王志良，宋洁琦.危机事件中公众认知机理与信息响应策略探究——基于危机演进阶段的视角[J].理论导刊，2015(4)：23-26.
    [23]
    MARCUS A A，GOODMAN R S. Victims and shareholders：Dilemmas of presenting corporate policy during a crisis[J]. The Academy of Management Journal，1991，34(2)：281-305.
    [24]
    ARPAN L M，POMPPER D. Stormy weather：Testing “stealing thunder” as a crisis communication strategy to improve communication flow between organizations and journalists[J]. Public Relations Review, 2003, 29(3)：291-308.
    [25]
    KAUFMANN J B，KESNER I F，HAZEN T L. The myth of full disclosure：A look at organizational communications during crises[J]. Business Horizons，1994，37(4)：29-39.
    [26]
    WEINSTEIN，NEIL D. Unrealistic optimism about future life events[J]. Journal of Personality and Social Psychology，1980，39(5)：806-820.
    [27]
    FAMA E F，FISHER L，JENSEN M C，et al. The adjustment of stock prices to new information[J]. International Economic Review, 1969，10(1)：1-21.
    [28]
    WALKER T J，THIENGTHAM D J，LIN M Y. On the performance of airlines and airplane manufacturers following aviation disasters[J]. Canadian Journal of Administrative Sciences，2005，22(1)：21-34.
    [29]
    BROWN S J，WARNER J B. Measuring security price performance[J]. Journal of Financial Economics，1980，8(3)：205-258.
    [30]
    ARPAN L M，ROSKOS-EWOLDSEN D R. Stealing thunder：Analysis of the effects of proactive disclosure of crisis information[J]. Public Relations Review，2005，31(3)：425-433.
    [31]
    COOMBS W T. Choosing the right words：The development of guidelines for the selection of the “appropriate” crisis-response strategies[J]. Management Communication Quarterly, 1995, 8(4)：447-476.
    [32]
    EPSTEIN L G，SCHNEIDER M. Ambiguity，information quality，and asset pricing[J]. The Journal of Finance，2008，63(1)：197-228.
    [33]
    DIESTRE L，RAJAGOPALAN N. Toward an input-based perspective on categorization：Investor reactions to chemical accidents[J]. Academy of Management Journal，2014，57(4)：1130-1153.
    [34]
    MARCUS A A，NICHOLS M L. On the edge: Heeding the warnings of unusual events[J]. Organization Science，1999，10(4)：482-499.
    [35]
    GERLOFF E A，MUIR N K，BODENSTEINER W D. Three components of perceived environmental uncertainty：An exploratory analysis of the effects of aggregation[J]. Journal of Management，1991，17(4)：749-768.
    [36]
    LYON L, CAMERON G T. A relational approach examining the interplay of prior reputation and immediate response to a crisis[J]. Journal of Public Relations Research, 2004，16(3)：213-241.
    [37]
    DUNCAN R B. Characteristics of organizational environments and perceived environmental uncertainty[J]. Administrative Science Quarterly, 1972, 17(3): 313-327.)
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