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Operational risk and reputation in financial institutions: Does media tone make a difference?

Barakat, Ahmed; Ashby, Simon; Fenn, Paul; Bryce, Cormac


Assistant Professor in Banking

Simon Ashby

Paul Fenn

Cormac Bryce


Operational risk announcements are unexpected adverse media news that potentially harm the reputation of financial institutions. This paper examines the equity-based and debt-based reputational effects of financial sentiment tones in operational risk announcements and shows how such reputational effects are moderated by alternative sources of public information. Our analysis reveals that the net negative tone and litigious tone have adverse reputational effects, and the uncertainty tone mitigates the adverse reputational impact. Additionally, alternative, simultaneous sources of information neutralize the reputational effects of textual tones. First, third-party information about the event (i.e. regulatory announcements and final settlements) dissolves the favorable (adverse) reputational impact of the uncertainty tone (litigious tone). Second, loss amount disclosure and firm recognition substitute the reputational effects of the net negative tone and uncertainty tone only in Anglo-Saxon countries and market-based economies. Overall, our findings indicate that the reputational effects of the media materialize most when there is lack of certain, quantifiable and regulated public information about the operational risk event.


Barakat, A., Ashby, S., Fenn, P., & Bryce, C. (2019). Operational risk and reputation in financial institutions: Does media tone make a difference?. Journal of Banking and Finance, 98, 1-24.

Journal Article Type Article
Acceptance Date Oct 14, 2018
Online Publication Date Oct 17, 2018
Publication Date 2019-01
Deposit Date Oct 22, 2018
Publicly Available Date Apr 18, 2020
Journal Journal of Banking & Finance
Print ISSN 0378-4266
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 98
Pages 1-24
Keywords Content Analysis, Financial Sentiment, Media News, Operational Risk, Reputational Risk, Textual Tone
Public URL
Publisher URL
Additional Information This article is maintained by: Elsevier; Article Title: Operational risk and reputation in financial institutions: Does media tone make a difference?; Journal Title: Journal of Banking & Finance; CrossRef DOI link to publisher maintained version:; Content Type: article; Copyright: © 2018 Elsevier B.V. All rights reserved.


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