The Impact of Public Relations Response Speed on Corporate Financing Costs Following Negative Public Opinion Events

This study examines how sudden negative public opinion events and the timing of corporate public relations (PR) responses affect firms' financing costs. Using a firm-year panel of 24 publicly listed automotive and related companies from 2015 to 2024, we conceptualize negative public opinion events as reputational shocks that increase information uncertainty and are priced by capital markets. Financing cost is measured at the firm level using the weighted average cost of capital (WACC), capturing the aggregate risk premium demanded by external capital providers. Employing panel regression models with firm-level controls, we find that sudden negative public opinion events significantly increase corporate financing costs. More importantly, we document a significant negative association between PR response speed and financing costs, indicating that slower, more deliberate responses are associated with more favorable financing conditions following a crisis. These findings challenge the conventional crisis-management view that faster responses are always optimal. Instead, the results suggest that in contexts characterized by high informational uncertainty, premature responses may amplify perceived risk, whereas cautious response timing can mitigate financing penalties. This study contributes to the corporate finance and crisis communication literature by providing empirical evidence on how communication strategy shapes debt market pricing and by highlighting the context-dependent role of response speed in managing reputational shocks.