Corporate Responses to Internet Flaming: Evidence from Japan

K. Mori, F. Takeda

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

This study examines how target companies react to the Internet flaming and how the reactions affect their stock prices, based on the 154 flaming events targeting Japanese listed companies from 2009 to 2018. Among 154 flaming events, target companies ignored the flaming and did not take any actions in 80 cases while actions were taken in 74 events. These actions include 49 official apologies, 18 objections, and 7 deletions of comments without appropriate apologies. Using a probit model, we demonstrate that flamed companies are more likely to take actions if their stock prices drop immediately after the flaming, the incident is published in the newspaper, or they have higher PBR or sales growth. We also show whether the effect dies down in the short term depends on responses of the flamed companies. When a company apologizes or deletes comments, its stock price tends to decrease significantly immediately after the outbreak of the flaming, but this decrease does not continue after a few days. In contrast, when the company objects to the flaming, its stock price starts to decline a few days after the flaming outbreak and continues to further decline.

Original languageEnglish
Title of host publication2019 IEEE International Conference on Industrial Engineering and Engineering Management, IEEM 2019
PublisherIEEE Computer Society
Pages359-363
Number of pages5
ISBN (Electronic)9781728138046
DOIs
Publication statusPublished - 2019 Dec
Externally publishedYes
Event2019 IEEE International Conference on Industrial Engineering and Engineering Management, IEEM 2019 - Macao, Macao
Duration: 2019 Dec 152019 Dec 18

Publication series

NameIEEE International Conference on Industrial Engineering and Engineering Management
ISSN (Print)2157-3611
ISSN (Electronic)2157-362X

Conference

Conference2019 IEEE International Conference on Industrial Engineering and Engineering Management, IEEM 2019
Country/TerritoryMacao
CityMacao
Period19/12/1519/12/18

Keywords

  • flaming
  • internet
  • SNS
  • stock price

ASJC Scopus subject areas

  • Business, Management and Accounting (miscellaneous)
  • Industrial and Manufacturing Engineering
  • Safety, Risk, Reliability and Quality

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