Investors Prefer “I” Over “We” When CEOs Apologize
New research analyzing 224 corporate apologies shows that investors favor leaders who take personal responsibility, with one notable exception. During corporate crises, the public looks to the CEO for accountability. Whether it's product recalls, workplace discrimination, or customer mistreatment scandals, CEOs are often put in the spotlight and required to apologize.
As a marketing professor, my initial research reveals that the specific words CEOs use in their apologies do matter and can even influence stock prices.
Case Studies in Corporate Apologies
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Samsung Electronics, 2016
Samsung recalled 2.5 million smartphones due to battery fires. They issued full-page ads in major U.S. newspapers stating, “We are truly sorry.” Despite the apology, Samsung’s stock kept falling, causing billions of dollars in market value losses.
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Tylenol Crisis, 1982
Following the deaths of seven people caused by cyanide-laced capsules, Johnson & Johnson’s CEO said,
“I apologize.”
He quickly ordered a nationwide recall, costing the company over US$100 million. This personal acceptance of responsibility and prompt action restored public trust and became an example of effective crisis management. The company’s stock price remained relatively stable.
The then-CEO of Tylenol’s parent company said “I apologize” and immediately ordered a recall, which helped rebuild trust and protect stock value.
Author’s summary: Investors respond better when CEOs use personal language like “I apologize” in crises, as it signals accountability and helps maintain trust and stock stability.