In anticipation of a downturn: The role of impression management in buffering against failure

The COVID-19 pandemic has triggered a surge in worldwide business failures. Firms have been actively searching for solutions to survive the crisis and improve business resilience in the post-crisis phase. In developing strategic responses to the risks of failing to get through the “black swan” event, tactics such as impression management may be selected by managers to mitigate contemporary challenges. This paper aims to uncover the actions taken by organisations to manage financial information and market perceptions. It compares the effects of the strategies in normal and unprecedented situations. The empirical analysis of delisting events suggests that the application of impression management is associated with lower delisting risks; however, the effects of such tactics are attenuated in the presence of macro-environmental shocks. Further analyses of market reaction reveal that investors seem to discount all information at the time of disclosure during the pandemic, making the market reaction to impression management less favourable. This provides further support for the reduced efficiency of impression management in alleviating delisting risks following the COVID-19 pandemic. Our results have important implications for firms' development of strategies in response to external turbulence.