Factors Affecting a Firm’s Image Following Allegations of Wrongdoing

What is it about?

A firm accused of wrongdoing, but having a good reputation prior to the incident, was judged more favorably than a firm with a poor reputation. Admitting wrongdoing was generally more effective than either denial or declining comment. In addition, there was some evidence that when the firm had a good reputation denial would lead to a better outcome than would declining comment. Declining comment in the face of an allegation never yielded better outcomes for the firm than the other responses.

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Why is it important?

The findings add to the evidence that a good reputation can act as an “insurance policy” or buffer if it has been developed prior to the occurrence of negative publicity. Also, the study’s results are consistent with the idea that audiences often assume that a response of silence to allegations signifies guilt.