News and Advertisements: How Negative News May Reverse Advertising Effects
May-May MeijerVrije UniversiteitJan KleinnijenhuisVrije UniversiteitINTRODUCTION
Corporations typically spend the largest part of their total communications budget on advertising. However, a single negative press report may be enough to damage a reputation and to cause share prices to plummet. For example, a phony press release about Emulex-which announced reduced earnings estimates, a government investigation because of accounting problems, and the discharge of the chief executive-caused Emulex to nose-dive (Berenson, 2000; Irwin, 2000).
Nevertheless, the influence of news relative to the influence of advertisement...