Anticipatory Impression Management for Potential Adverse Events: Positive Framing in the Wake of Short Seller Attacks on a Competitor

Anticipatory impression management (AIM) provides a theoretical foundation for understanding the tactics organizations use to mitigate the potential adverse consequences of known upcoming events. We extend this theorizing to encompass potential upcoming events with known adverse consequences. We posit that a potential event is more likely to induce AIM to the extent that the firm is aware the event might occur, motivated to mitigate its potential consequences, and capable of engaging in tactics that could reduce the event’s likelihood. We test our theorizing in the scenario wherein a competitor has been attacked by a short seller, which raises the specter of a short seller attack on the focal firm. We contend that, following an attack on a competitor, chief executive officers use positive framing in earnings conference calls as an AIM tactic to deter short sellers. Examination of 1,989 firms with a direct competitor attacked by a short seller confirms our ideas. Our study thus extends the boundaries of theory on AIM and broadens research on short selling to encompass principles of attack prevention.