<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>This study examines strategic firm-level advertising behavior around accounting-based brand scandal events. This analysis is guided by propositions presented in the brand scandal and marketing-finance literatures regarding firm response to brand scandal events. While, recent findings from the marketing-finance literature show that managers tend to reduce advertising when anticipating the release of negative information, this response is contrary to the established support and recommendation from the extant brand scandal literature. This inconsistency suggests that firms treat product-based brand scandal events different from accounting-based brand scandal events. A sample of firms accused of financial misreporting by the Securities and Exchange Commission (SEC) and US Department of Justice between 1977 and 2010 is used to examine the central research question and hypotheses regarding the relationship between accounting-based brand scandals and firm-level advertising spending. The results of this analysis provide empirical support for the relevance of advertising expenditures to firm’s approach to reputation management strategies in the wake of accounting-based brand scandals.</p>
</abstract>

This study examines strategic firm-level advertising behavior around accounting-based brand scandal events. This analysis is guided by propositions presented in the brand scandal and marketing-finance literatures regarding firm response to brand scandal events. While, recent findings from the marketing-finance literature show that managers tend to reduce advertising when anticipating the release of negative information, this response is contrary to the established support and recommendation from the extant brand scandal literature. This inconsistency suggests that firms treat product-based brand scandal events different from accounting-based brand scandal events. A sample of firms accused of financial misreporting by the Securities and Exchange Commission (SEC) and US Department of Justice between 1977 and 2010 is used to examine the central research question and hypotheses regarding the relationship between accounting-based brand scandals and firm-level advertising spending. The results of this analysis provide empirical support for the relevance of advertising expenditures to firm’s approach to reputation management strategies in the wake of accounting-based brand scandals.

Accounting-Based Brand Scandals and the Implications for Firm-Level Advertising Spending

Studies in Business and Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

This study examines strategic firm-level advertising behavior around accounting-based brand scandal events. This analysis is guided by propositions presented...

Accounting-Based Brand Scandals and the Implications for Firm-Level Advertising Spending

Published Online: Sep 27, 2021

Page range: 230 - 239

DOI: https://doi.org/10.2478/sbe-2021-0036

Keywords
Advertising spending, accounting-based brand scandal, brand crisis management

© 2021 Sharpe Stacey, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Accounting-Based Brand Scandals and the Implications for Firm-Level Advertising Spending

Published Online: Sep 27, 2021

Page range: 230 - 239

DOI: https://doi.org/10.2478/sbe-2021-0036

KeywordsAdvertising spending, accounting-based brand scandal, brand crisis management

© 2021 Sharpe Stacey, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
Advertising spending, accounting-based brand scandal, brand crisis management