Publication Type
Journal Article
Version
publishedVersion
Publication Date
4-2017
Abstract
Prior studies have shown that a firm’s violation of expectations might lead to less favorable evaluations of that firm by stakeholders. However, the literature has been silent on whether and how the process by which stakeholders evaluate a firm could change subsequent to the violation. Drawing from signaling and screening theory, we examine how evaluative processes might change in the context of financial restatements. We find that investors appear to shift their relative reliance on particular signals in determining a firm’s stock price following an earnings restatement. These changes are at least partly reversed following the replacement of an incumbent CEO. We further find that these evaluative changes vary depending on the severity of the violation.
Keywords
CEO replacement, financial statementl misconduct, reputation repair, signaling
Discipline
Human Resources Management | Leadership Studies | Strategic Management Policy
Research Areas
Strategy and Organisation
Publication
Academy of Management Journal
Volume
60
Issue
2
First Page
554
Last Page
583
ISSN
0001-4273
Identifier
10.5465/amj.2014.1041
Publisher
Academy of Management
Citation
GOMULYA, David and MISHINA, Yuri.
Signaler credibility, signal susceptibility, and relative reliance on signals: How stakeholders change their evaluative processes after violation of expectations and rehabilitative efforts. (2017). Academy of Management Journal. 60, (2), 554-583.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/5842
Copyright Owner and License
Publisher
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.5465/amj.2014.1041
Included in
Human Resources Management Commons, Leadership Studies Commons, Strategic Management Policy Commons