It seems intuitive for listed companies facing a crisis-like situation: respond aggressively to defend yourself, tell your side of the story, regain the narrative and thereby reestablish control of the situation.

If you’re the CEO or communications head of that company you’d do well to pause and reconsider your actions.

A new research conducted by academics at North Carolina State University suggests that companies who adopt an aggressive stance during a crisis are likely to suffer a drop in the company’s stock price.

Associate professor Alice Cheng and her colleagues tracked 10 years of data and used big data analytic tools to capture shifts in how the companies and the public reacted to a complex crisis-like situation.

Focusing on Monsanto/Bayer’s “Roundup” crisis from 2012 to 2022, the study analyzed 232,694 tweets and 334 articles to examine corporate stances, public stances, and various relationship modes formed from both party’s standpoints throughout the crisis. 

The study found that the company’s stance in public messaging evolved significantly over the course of 10 years—sometimes taking an aggressive stance, sometimes neutral, and sometimes accommodating to public concerns. An “aggressive” stance from the companies involved included a range of negative reactions like denial, accuse, attack, or what some might characterize as a “robust defense.”

When the company took an aggressive stance, it was often associated with the public taking an aggressive stance as well. This public reaction led to a significant decline in the company’s stock price.

This opens up an interesting question of why companies take aggressive stances during crisis-like situations. Our experience is that unprepared companies are likely to take aggressive stances.

Such companies are untutored about how crises can escalate if mishandled and do not have in place the proper protocols to respond. So when they face a crisis-like situation they panic and feel that they have to do something, that doing something more is better. So their actions bear the hallmarks of overcompensation – defensiveness and aggression.

On the other hand there are crisis-ready companies. These are companies that take the threat of a crisis affecting them seriously and therefore take pains to train their people in crisis management principles and put in place procedures for handling such situations.

Such companies take it in stride and face crises with a cool head and take everything in stride.

Singapore Airlines is one such company. When one of its planes was faced with a turbulence incident where a passenger died and 30 others injured, its emergency protocol kicked in and the way they conveyed the message to those affected and the public showed accountability and empathy.

It handled the situation so well that it won praises for handling the situation and its reputation and stock price came through the incident intact.

Time and resources spent on preparing for crisis-like situations is never wasted. But what about your company, how do you think its management would react if it is faced with a crisis? Are the bosses likely to ask for an aggressive and robust defense response, or can they be calm and level-headed in such situations because they have the protocols in place?

Written by Agnes Karina Rosari

Partner, Crisis Management Lead