Case Study On "Contagion Effect" Of Moral Hazard In Product Market And Its Governance Effect

When an enterprise has a reputation crisis,the event not only indicates some information of the enterprise,but also the information that affects the value of other enterprises.Stakeholders will re-judge the enterprises related to themselves based on this information.Therefore,the negative news of an enterprise may lead to the public's suspicion of the behavior of other similar enterprises in the industry,resulting in a comprehensive integrity crisis of the industry and forming a "contagious effect".As the public attaches more importance to food safety,the milk powder industry is facing more and more pressure of reputation capital management.Once the "contagion effect"occurs,consumers will question the entire industry because of a companyls scandal,reduce trust in similar enterprises,resulting in damage to reputation and even re-evaluation of market value.Based on information asymmetry theory,stakeholder theory and corporate reputation theory,this paper reviews the existing literature on moral hazard in product market,the relationship between "contagion effect"and corporate reputation,and the economic consequences of corporate reputation.Then,the relationship between "contagion effect"and eorporate reputation is elaborated,and the specifie path of eorporate governance of"contagion effect" through reputation repair is analyzed from two aspects of consumer purchase intention and purchasing power.Based on the perspective of reputation mechanism,this paper takes Sanyuan Milk Powder as the research object.The "contagion effect" caused by many quality and safety incidents in the milk powder industry has led to the damage of corporate reputation,and the decline of corporate value has prompted Sanyuan to repair corporate reputation.Under the reputation mechanism,the three elements can control the "contagion effect" through direct investment behavior such as advertising,fostering consumer trust and establishing corporate brand image,and further control the "contagion effect" through indirect investment behavior such as increasing R&D expenditure and standardization construction.Through actively restoring reputation,Sanyuan manages the "contagion effect",and its financial and non-financial performance has also been improved,which is embodied in the growth of dairy sales and business income,as well as the improvement of brand value and technological innovation performance of enterprises.These good performances will give enterprises enough motivation to formulate long-term reputation capital management programs to establish their brand image in the future.At the same time,it has a certain reference significance for other enterprises in the industry which are also affected by the "contagion effect".