In January 2002, the El Mundo newspaper published a series of articles on an apparent case of insider trading in a company created by the President of Telefónica when he was responsible for Tabacalera (now Altadis) and subsequently sold to one of his nephews. In addition to a number of editorials and information on the events and on the reactions to publication of these articles (such as “César Alierta unexpectedly fires all the top management of Telefónica Media” [12th], and “The PSOE asks the anti-corruption prosecutor to act against Alierta for ‘evidence of an offence’” [11th]), the newspaper gives prominence to the following articles in which additional information is provided: “Investigation: a nephew of Alierta received 309 million in six months from shares in Tabacalera when his uncle was President” [9th]; “Financial scandal: the present Secretary of Telefónica helped to exonerate Alierta’s nephew in the National Securities and Exchange Commission” [10th]; “Insider information: Alierta set up the company himself and obtained the loan used by his nephew (14th); “Insider information: the Securities Commission closed the investigation when Alierta was summoned to declare” [15th]; and “Insider information case: Alierta chose a former employee to certify the alleged sale to his nephew” [16th]. Since all of these events had taken place long before, the newspaper probably had all the information on 9 January. If so, why did they prefer to spread it out throughout the week? How does this complicate the “crisis management” of the affected firm?


One explanation might be that the asymmetrical function of value magnifies a trickle of bad news.

A main advice on crisis management is to be frank from the beginning and to disclose all available information as soon as possible. This is consistent with the “combine losses” advice in the “Prospect Theory” developed by Kahneman and Tversky. The practical difficulty comes form the fact that the affected firm does not often know how much information the newspaper has; and, by underestimating it, the firm tends to make mistakes—for instance denying facts that are later made evident by new disclosures of the newspaper.

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