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The purpose of this paper is to explore the impacts of product harm, consumers' product knowledge and firms' negative information disclosure on ethical evaluation of a firm, especially, the moderating effects of product knowledge and negative information disclosure.

A 3×2×2 between‐subject design with three levels of product harm, two levels of product knowledge, and two treatments of negative information was used in this study. The experimental product is diet food.

The findings reveal that the level of product harm affects consumers' ethical evaluation. Furthermore, the individual's ethical evaluation will influence his or her purchase intention. The main effect of subjective knowledge is significant while its moderating effect is not significant. It is also found that the negative information disclosure will lower consumer's ethical evaluation of a firm, and the effect of product harm on ethical evaluation will be stronger for harmful products than for harmless products when the negative information is disclosed.

Marketers might need to be especially responsive if their practices result in a diminished reputation for their firms and lost sales. Exploiting the vulnerability of consumers or worsening their situation by marketing harmful products might be evaluated as unethical under principles of justice. It is suggested that marketers include increased disclosures of actual product harm levels relative to industry norms.

Consumers' product knowledge and firms' negative information disclosure are integrated into the model, exploring the effect of product harm on consumer's ethical evaluation of a firm and their moderating effects are discussed.