Saving face? When emotion displays during public apologies mitigate damage to organizational performance

• Deviant affect (happiness) reduced corporate apology effectiveness, relative to normative affect (sadness).
• Displays of happiness during corporate apologies were negatively related to stock market returns.
• Displays of sadness during corporate apologies had a protective effect on stock market returns.
• Effects of deviant and normative affect on stock market returns were greater for high-status than low-status representatives.

In the wake of corporate transgressions and scandals, how do apologizers’ expressed emotions affect investors’ perceptions of the organization in question? We analyzed the market effects of normative versus deviant facial affect expressed during apologies for corporate wrongdoing. Archival data revealed that the expression of deviant affect was associated with decreased investor confidence in the form of negative stock market returns; adverse financial effects persisted up to three months post-apology. Moreover, this effect was exacerbated when a company representative with greater responsibility within the organization delivered the apology. Experimental data further revealed that third parties interpreted deviant affect (smiling) as a signal of insincerity, which reduced their confidence in these representatives’ organizations. Ultimately, we find that subtle emotion expressions are detected by stakeholders, signal insincerity, and have important consequences for organizations. We suggest that organizations must carefully consider the nonverbal behavior of apologetic representatives in the wake of transgressions.