Companies involved in scandals often suffer damage to their reputations from media, consumer, or investor criticism For instance, notable oil spills, from Exxon’s 1989 Exxon Valdez disaster to BP’s 2010 Deepwater Horizon debacle, resulted in both hundreds of millions of dollars in direct regulatory penalties and short-term stock market losses (Länsilahti 2012), substantial longer-term losses of reputational capital, (McGuire, Holtmaat, and Prakash 2020) and punitive legislation. The reputational consequences of socially irresponsible corporate actions may also escalate in light of a recent increase in investors’ interest in environmental, social, and governance (ESG) issues.

However, little … Read more