How social media can help and hurt companies during product recalls

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 , 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 of tweets by other users exacerbates negative market reactions as disgruntled users interject negative sentiment into the online dialogue, while increased frequency of by the firm lessens negative market reactions.


Explore further

Social media's Hootsuite joins $1bn club

More information: Journal of Accounting Research , DOI: 10.1111/1475-679X.12074
Provided by Wiley
Citation: How social media can help and hurt companies during product recalls (2015, February 18) retrieved 20 October 2019 from https://phys.org/news/2015-02-social-media-companies-product-recalls.html
This document is subject to copyright. Apart from any fair dealing for the purpose of private study or research, no part may be reproduced without the written permission. The content is provided for information purposes only.
10 shares

Feedback to editors

User comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more