••• corporate image research
If the stock tanks, don’t pass the buck
Honesty is the best policy, and a new study from the University of Missouri finds that companies can benefit when they publicly accept the blame for poor performance. Researchers found companies that performed poorly yet blamed other parties – such as the government, competitors, labor unions or the economy – experienced a significant blow to their stock and had difficulty recovering. Companies that accepted blame and had a plan to address their problems stopped the decline in their share prices after their announcement but those companies that blamed others continued to experience falling share prices for the entire year following their public explanation.
“Honesty is appreciated, especially when it’s a difficult message from leaders,” said Stephen Ferris, professor and senior associate dean at the MU Trulaske College of Business. “Investors will accept a forthright recognition of an honest mistake, expecting that corrective actions are likely to follow. When firms explain a negative event as due to an external cause, company leaders can appear powerless or dishonest to shareholders.”
In the study, Ferris and his co-authors, Don Chance of Louisiana State University and James Cicon of the University of Central Missouri, reviewed company announcements from 1993 through 2009 and identified 150 announcements describing poor company performance. The researchers found that slightly more than two-thirds of the announcements attributed the poor performance to external forces. Ferris said that just taking responsibility was not the entire solution. When companies accepted the blame, they also had to explain how they were going to fix the problem. The study, Poor Performance and the Value of Corporate Honesty, will be published in the Journal of Corporate Finance.
••• automotive research
Appetite good for Apple electric vehicle
Consumers who own hybrid or electric vehicles have a high level of trust and interest in an electric vehicle that Apple plans to manufacture by 2020, a study by Farmington Hills, Mich., research firm Morpace has found.
The survey was conducted among more than 250 U.S. based electric and/or hybrid vehicle owners who are part of the Morpace MyDrivingPower online community. The study received a 44 percent response rate and was designed to gauge consumer appetite for Apple’s electric vehicle.
The consumers in the online panel consistently held the Apple brand in high esteem. More than three-quarters of the consumers would be “somewhat likely,” “very likely” or “extremely likely” to purchase an Apple electric vehicle.
Among the other notable highlights of the survey: 64 percent of consumers would be willing to pay between $30,000 and $50,000 for an Apple electric vehicle in 2020; another 22 percent would be willing to pay more than $50,001. The vast majority of consumers expect the design of an Apple electric vehicle to “be better” than other electric vehicles (79 percent). Tesla was named by consumers to be the best brand partner for Apple (42 percent).