Apologize or deny? How companies defend legitimacy of Wall street, Main street, and Market street after corporate misconduct

The purpose of this study is to analyze which measures corporations use to defend legitimacy after conducting misconduct and how different stakeholders react to these legitimacy‐defending measures (LDMs). Drawing on legitimacy theory and the concept of thought worlds, we derive hypotheses for three stakeholder groups and two types of corporate misconduct (CM): social‐ and environmental‐related CM and product‐ and service‐related CM. These hypotheses are tested in a sample of 343 cases of CM. Data for these CM were hand‐collected from various corporate publications, newspapers, and websites. We find that investors, customers, and society respond differently to different LDMs and different types of CM. The study contributes a stakeholder‐ and CM‐differentiated approach to legitimacy theory and adds to the literature on corporate misconduct, corporate legitimacy, and stakeholder management.