There have been several major public relations disasters over the years that have impacted dividend-paying public companies. In most cases, these companies eventually managed to recover and rebuild their brand’s reputation, while the financial repercussions have depended largely on the direct impact of product recalls or clean-up efforts.
BP plc’s (BP) Deepwater Horizon oil spill is perhaps the most recent public relations disaster aside from United Airlines. Toyota Motor Corp.’s (TM) recall of 8.8 million vehicles due to accelerator defects was another recent public relations disaster. United Airlines (UAL) has experienced a significant backlash from consumers after a pair of incidents involving passengers on its airline. Despite the public outcry, history suggests that there will be limited repercussions in terms of revenue, profitability and dividend payments. The only time companies have experienced issues with dividends have been when significant fines were imposed, but the long-term impact will be seen in upcoming quarters.
Source: Dividend.com
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