The Effects Of Social Media On Corporate Bad News And A Ceo 's Apology

4956 Words Aug 14th, 2015 20 Pages
Social media has become prominently popular. Tens of millions of users login to social media sites like Twitter to disseminate breaking news and share their opinions and thoughts. For businesses, social media is potentially useful for monitoring the public perception and the social reputation of companies and products. Despite great potential, how bad news about a company influences the public sentiments in social media has not been studied in depth. The aim of this study is to assess people’s sentiments in Twitter upon the spread of two types of information: corporate bad news and a CEO’s apology. We attempted to understand how sentiments on corporate bad news propagate in Twitter and whether any social network feature facilitates its spread. We investigated the Domino’s Pizza crisis in 2009, where bad news spread rapidly through social media followed by an official apology from the company. Our work shows that bad news spreads faster than other types of information, such as an apology, and sparks a great degree of negative sentiments in the network. However, when users converse about bad news repeatedly, their negative sentiments are softened. We discuss various reactions of users towards the bad news in social media such as negative purchase intent. From a corporate point of view, the “diffusion of bad news” often means a crisis, having a negative impact on brand reputation, word-of-mouth advertisements, and even sales. Before the social media era, companies used to…
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