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March 29, 2010 / The_Mike_Johnson

Bad Press Can Be Risky for Your Shareholders

It has been said that any publicity, good or bad, is good since you are getting media coverage of your company, organization, or client. But lately Goldman Sachs has been receiving a lot of bad publicity and I don’t think Goldman shareholders  care for that coverage. The article, ‘Goldman Lists New ‘Risk’: Bad Press in the March 2, 2010 Wall Street Journal, Goldman Sachs states in its annual report that “adverse publicity” could have “a negative impact on our reputation and on the morale and performance of our employees, which could adversely affect our businesses and results of operations.”

The article continues:

“The unusual disclosure in a 12-page section of “risk factors” ranging from rocky financial markets to natural disasters is the latest sign of Goldman’s whipping-boy status among rivals, lawmakers and angry Americans because of the firm’s giant profits.

Some ways Goldman says it could be hurt by bad publicity:

  • Investigations can start ‘regardless of the factual basis for the assertions.’
  • Morale and performance of our employees’ could be hurt.
  • Such morale damage can ‘seriously harm our businesses.’

Goldman has long viewed its communications department as a risk-related function, meaning executives realize that a misstep in how it deals with the media or an issue could cause unnecessary damage to the company’s brand name.

As criticism of Goldman intensified, the firm has aggressively responded to stories it views as false or exaggerated. But the approach has drawn mixed reviews.”

As we continue through the fallout of the 2008 financial crisis (almost two years later) Goldman Sachs still has the bull’s-eye on them. I bet if Goldman Sachs had the cure for cancer tomorrow, people would still hate them.

Read the full article here.

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