News of Corporate Failure: Evaluating the Relationship Between Individual Assessments and Market Investments

Abstract

Individuals’ comprehension of communication is shaped by the use of metaphor. This study illustrates how the use of metaphor in business and economic news coverage shapes individuals’ responsibility attributions in ways that can ultimately influence consumers’ investment decisions. In a randomized experimental design, participants were invited to read news articles that described the bankruptcy of a business. The treatment text narrated the bankruptcy using metaphor, while the control text narrated the same event without the use of metaphor. After exposure to the communication text narrated with metaphor, responsibility attributions and subsequent investment decisions were significantly altered. The findings suggest that individual responsibility attributions, particularly when employed in connection with exposure to metaphorical loss frames, have the ability to influence individuals’ economic decisions. The theoretical importance and prospects for future communication studies are considered.

Keywords:

• Communication Effects
• Economics
• Framing
• Metaphor
• News
• Prospect Theory
• Responsibility Attributions

Notes

Note. Model p < .006, e ^B =exponentiated B, *p= < .10, **p= < .05. Model controls for existing investment in the market (i.e., ownership of stocks and/or mutual funds).

Note: Model p < .006, e ^B  = exponentiated B, *p = < .10, **p = < .05. Model controls for existing investment in the market (i.e., ownership of stocks and/or mutual funds).

Tversky and Khaneman further detail the relationship between prospect theory and framing in their 1992 “Advances in Prospect Theory,” writing that “prospect theory distinguishes two phases in the choice process: framing and valuation. In the framing phase, the decision maker constructs a representation of the acts, contingencies, and outcomes that are relevant to the decision. In the valuation phase, the decision maker assesses the value of each prospect and chooses accordingly” (pp. 299–300). This study focuses primarily on the first phase of the choice process–framing–by considering how metaphor and responsibility attributions operate within framing processes. It secondarily considers how, in the valuation phase, metaphor and responsibility attributions may influence economic decisions.

Additional information

Notes on contributors

Ann E. Williams

Ann E. Williams (Ph.D., University of Michigan, 2008) is an assistant professor in the Department of Communication at Georgia State University.