Buffering and bridging: How firms manage the burden of celebrity

On the basis of the sociopolitical legitimacy perspective, we examine how firms respond to the celebrity pressure as well as the underlying mechanisms. We argue that the pressure associated with having a celebrity owner/leader will push firms to undertake activities that “bridge” with stakeholders by engaging in corporate giving while at the same time buffer against them by revealing less information through earnings management. The extent to which a firm engages in such maneuvers varies with the level of social and political pressure from stakeholders. Our hypotheses were supported by an analysis of 297 publicly listed Chinese firms whose owners had recently been included in a list of China’s richest people. The findings enhance our understanding of the sources of celebrity pressure and extend the research on celebrity and legitimacy management.