Using two experiments, I examine how apologizing for fraud influences investor's avoidance and revenge behavior. Investors in experiment one report how many shares they would sell and how likely they would be to pursue legal punishment after discovering fraud has occurred in an organization they are currently invested in and subsequently reading about management's response to the fraud. I manipulate the nature of fraud as fraudulent financial reporting or asset misappropriation. I also manipulate whether management apologizes, scapegoats responsibility, or remains (...) silent after the fraud. Results show avoidance and revenge behavior is more negative after misreporting fraud. Data suggest that this difference may be partially attributable to the underlying moral norm that is violated. Specifically, misreporting is primarily a moral violation of deception, whereas embezzlement is primarily a moral violation of stealing. Results also show differential investor reactions depending on the type of fraud and management's response. For misreporting, revenge behavior is higher when management apologizes, but there is no effect on avoidance behavior. For embezzlement, avoidance behavior is reduced when the organization apologizes, but revenge behavior is unaffected. In experiment two, I replicate the misreporting condition from experiment one and manipulate apology sincerity. Results show that apology sincerity is positively associated with revenge behavior. Results of these two experiments extend both accounting and trust repair research by emphasizing the importance of disentangling moral integrity-based trust violations and that the adage of "just say you're sorry" is helpful in some situations and harmful in others. (shrink)

In a corporate apology, the apologizer can be either a male or a female. How does the gender of the apologizer influence consumer forgiveness? We suggest that the relative effectiveness of corporate apologies made by males versus females depends on the nature of the corporate wrongdoing, namely whether the wrongdoing is related to performance or to value. Three experiments demonstrate that a male apologizer elicits more consumer forgiveness than a female apologizer for performance-related wrongdoings, while a female apologizer garners more (...) forgiveness than a male apologizer for values-related wrongdoings. These effects are driven by consumers’ social perceptions of the different genders. Specifically, a female apologizer is perceived as warmer which offsets the perceived lack of warmth resulting from values-related corporate transgressions, while a male apologizer is perceived as more competent which compensates for the perceived lack of competence resulting from performance-related corporate transgressions. However, this effect is attenuated when consumers are the same gender as the apologizer, and can be reversed when the apologizer is personally responsible for the wrongdoing. These findings offer novel insights on corporate apologies, gender-trait associations, and gender and forgiveness, while suggesting that companies must carefully consider the gender of the spokesperson in the wake of transgressions. (shrink)