SEBASTIAN STIRNKORB

This study investigates the joint effects of company identification and locus of attribution on investors' judgments of management credibility. We study these effects in the context of an adverse event disclosure. Building on Social Identity theory and prior empirical findings, we posit that shareholders identify with the company they are invested in and make different judgments about managerial credibility than non-identified outside investors when managers employ external attribution. The findings from our experiment confirm that non-identified investors view external attributions as less credible than identified investors do. In contrast, we find no such difference when management uses internal attribution. We provide evidence on the mediating role of in-group favoritism, and we document that the differences in credibility are mainly driven by perceptions of trustworthiness (rather than competence). In addition, our results indicate that differences in credibility judgments between..

Primary location: Amsterdam Netherlands