Softening the Blow: Company Self-Disclosure of Negative Information Lessens Damaging Effects on Consumer Judgment and Decision Making

Abstract

Is self-disclosure of negative information a viable strategy for a company to lessen the damage done to consumer responses? Three experiments assessed whether self-disclosing negative information in itself lessened the damaging impact of this information compared to third-party disclosure of the same information. Results indicated that mere self-disclosure of a negative event positively affected consumers' choice behavior, perceived company trustworthiness, and company evaluations compared to third-party disclosure. The effectiveness of the self-disclosure strategy was moderated by the initial reputation of a company, such that its impact was only observed for companies that had a poor reputation at the outset. For them, self-disclosure considerably lessened the impact of negative information compared to third-party disclosure. For companies that enjoyed a positive reputation, type of disclosure did not affect consumer responses. Mediation analysis showed that perceptions of company trustworthiness underlie the effects of the self-disclosure strategy on consumer judgment.