Question 2: What the future reputational damage affect and how could it be measured?
There is lots of news and rumors spread about Baidu.com have received some payment from tainted milk manufacturer to not advertising any news about them. There is argument that these rumors have no evidence. But, many knew that this company integrated paid advertisements into its search listing. So, users will question the reliability of information that Baidu.com display to them. Of course this will damage public’s trust. This is because the user somewhat feel like being cheated by them because of not revealing the true story of what happen and the true information. User want a truth and reliable information which Baidu.com failed to provide. Once the public’s trust is completely lost, it is hard to gain it back. It takes time to get back user trust but for sure user will not trust them 100% anymore. If user boycott and stop using baidu.com as their main search engine, company will face bankruptcy. How the company is view could be measured by how many people use and visit the site. The number of viewer or user may be lower after that rumors came out. This indicator can be a tool to measure the damage of public trust.
Other that tunes out public’s trust, these rumors also may vanish investor’s interest to invest in this company. These sorts of rumors give a bad image of Baidu.com. When company image was drowning out, investors of course will have no interest in the company anymore and future investor also may change their mind to not invest in the company. If those investors are gone, company will have no more money to survive in the business. Bad rumors affect the company image, and company image will affect the share price. These rumors may make the share price going down. The drop of share price and the number of investors withdraw from the company may be the tools to measure investor’s interest and trust towards the company.
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