Media Darlings and Media Demons: The Effect of Media Reputation on Firms’ Post-Scandal Recovery

In this paper, we investigate the role of pre-scandal media reputation on firms’ post-scandal reputational recovery. Building on the concept of media reputation as a strategic resource, we evaluate the emotional content of the media coverage of firms before they are found to have engaged in misconduct. We find that both media darlings - those that the media describes with high levels of positive emotion - and media demons - those the media describes with high levels of negative emotion - recover their prior media reputations more quickly than firms with moderate levels of either positive or negative emotional language in media reporting. Our findings suggest that positive media reputation buffers firms from negative evaluations, consistent with prior research. In addition, we find that negative media reputation also acts as a buffer to further reputational damage, which we speculate is because misconduct is consistent with expectations of such firms. We test our theory on a sample of 84 U.S. firms restati...