The signals behind the storm The role of ESG/CSR reputation and crisis history in shaping financial performance following product-harm crises
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2025-06-30
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en
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This research aims to examine how product-harm crises affect financial performance, and whether ESG/CSR reputation buffers and crisis history amplifies this effect, using signaling theory as the theoretical lens. Based on an event study of 1,080 product recall events from 420 publicly listed firms (2015–2023), the financial impact is assessed using cumulative abnormal returns and OLS regression. The findings show that product-harm crises function as credible, unintentional signals that negatively affect financial performance. ESG/CSR reputation operates as an intentional signal that buffers the negative impact of crises, confirming its role as an insurance mechanism. Crisis history was expected to intensify the market’s reactions through signal cascading, but the results were not significant. This study contributes to the literature by investigating unintentional and intentional signals, the insurance effect of reputation in specialised crisis events, and crisis history from a signaling theory perspective. This research indicates that managers should proactively manage their firm’s intentional and unintentional signals when navigating crises.
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Faculteit der Managementwetenschappen