SHOCK EVENTS AND CORPORATE ANNOUNCEMENTS

In recent years, the attention of scholars and managers on crisis management has been increasing. Dur- ing the past two decades many researchers have, in fact, conducted theoretical and empirical studies on the topic of large scale organizational crises (Pearson and Clair, 1998; Pearson and Mitroff, 1993; Shrivastava et al., 1988; Shrivastava, 1993), aiming at understanding the causes, effects and management of such events. As corporate crises are multidisciplinary phenomena, scholars have used different perspectives of analysis, such as psychological, social-political and technological-structural views, as well as integrated frameworks (Pearson and Clair, 1998; Shrivastava et al., 1988) for observing such events, but most of the studies are focused on the detection and prevention of the crisis itself. Less attention has instead been given to the management and measurement of the effects of a crisis, in particular when the crisis is the consequence of a shock event. A group of researchers have attempted to evaluate the impact of such phenomena on shareholder value (Coleman, 2008; Ferretti and Ziccardi, 2003; Knight and Pretty, 1999; Walker et al., 2005), while others have focused the attention on the different types of communication strategies following a crisis (Benoit, 1997; Coombs, 1995; Coombs, 2000; Marra, 1998), but only Marcus and Goodman (1991) have tried to evaluate the impact on investors’ expectations of the announcements made by corporate managers during a crisis. After a shock event, instead, the response strategies made by the organiza- tion in order to face the emerging situation become of vital importance and represent different signals that corporate management send to financial markets (Myers and Majluf, 1984; Ross, 1977). A wrong signal may even threaten the organizational survival. There is, therefore, a lack of literature on this theme, in particular on the effects that the different corporate announcements following a shock event may have on shareholders’ value. The aim of the present paper is to fill this gap of research, trying to verify if, in case of a shock event, there are types of corporate announcement that may influence stock price behaviour better than others. Following the communication research literature, that suggested the influence of situations on the selection of corporate announcements (Coombs, 1995; Coombs, 2000; Coombs and Holladay, 2002), we’ll try also to determine if the communication strategy may be affected by the type of shock event. The paper is organised as follows. In Paragraph 2, we first provide a definition of shock event, underlining the differences with the concepts of crisis and disaster. Paragraph 3 analyses the different communication strategies following a shock event, drawing from signalling and attribution theories and it illustrates the hypotheses. In Paragraph 4, we propose the research methodology. Paragraph 5, instead, shows the results and discussion of the empirical analysis, while in the last session we conclude analysing implications of the results, limitations and opportunities for future research.