News and Advertisements: How Negative News May Reverse Advertising Effects

This study focuses on the effects of news and advertising expenditures on corporate reputation. Both advertisement expenditures and the tone (or tenor) of business news exert a positive influence on corporate reputation.

News and Advertisements: How Negative News May Reverse Advertising Effects

May-May MeijerVrije UniversiteitJan KleinnijenhuisVrije Universiteit


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...

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