Study: Negative media attention can help companies

April 8, 2013
Category: Uncategorized


You may be doing your subject a favor with that negative article: A new study finds a a connection between how much negative press a company gets and “the likelihood that the company would subsequently undergo a strategic shift.”

Michael K. Bednar, Steven Boivie and Nicholas R. Prince analyzed 40,000 articles about 250 companies in the S&P 500 over five years. Negative language, they found, “is a salient trigger that suggests to top managers that the current strategy needs to be changed.”

Changes following negative media were more likely to occur in companies with independent directors more open to “external evaluations,” a summary of the study says.

CEOs and directors should pay close heed (yet not overreact) to media coverage, the authors write, because scrutiny from the press is often the wake-up call for needed change. Although positive performance in the stock market can soften the impact of bad news, executives should not use that cushion as an excuse to dismiss downbeat signals from the media.


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