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Abstract

Many academics and public relations specialists have suggested that, when responding to crises, executives should make full and immediate disclosures about the circumstances surrounding the event. Corporate legal advisors, on the other hand, often caution their clients against unnecessary public statements. This article examines the pros and cons of a full disclosure policy and the circumstances in which it should or should not be used. In some instances, what you don''t say can hurt you. For example, nondisclosure might lead journalists--hard pressed by deadlines--to seek other sources, many of which might have a vested interest in making the company appear in the worst light. But in other situations, what you do say can hurt you. Cases are cited in which organizations revealed information that shocked constituents, and such news became a separate and more damaging crisis in itself. The point is, we have scant knowledge about firms that managed crises successfully by withholding information; we see only those cases in which crises were played out in the media, so we have a distorted view of how crises should be handled. Disclosure is rarely an all-or-nothing choice; the decision- maker''s goal should be that of finding the appropriate amount and pace of reporting to the public.

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Abstract

Many academics and public relations specialists have suggested that, when responding to crises, executives should make full and immediate disclosures about the circumstances surrounding the event. Corporate legal advisors, on the other hand, often caution their clients against unnecessary public statements. This article examines the pros and cons of a full disclosure policy and the circumstances in which it should or should not be used. In some instances, what you don''t say can hurt you. For example, nondisclosure might lead journalists--hard pressed by deadlines--to seek other sources, many of which might have a vested interest in making the company appear in the worst light. But in other situations, what you do say can hurt you. Cases are cited in which organizations revealed information that shocked constituents, and such news became a separate and more damaging crisis in itself. The point is, we have scant knowledge about firms that managed crises successfully by withholding information; we see only those cases in which crises were played out in the media, so we have a distorted view of how crises should be handled. Disclosure is rarely an all-or-nothing choice; the decision- maker''s goal should be that of finding the appropriate amount and pace of reporting to the public.

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