Caught when failing to meet environmental standards: The case of the automotive industry

Rikki Smith, Lincoln C. Wood, Jason X. Wang

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

This research documents that automotive firms’ failures to meet environmental standards are associated with a statistically significant negative stock market reaction. The results are based on a sample of 41 environmental standards failure announcements made from 1984 to 2016. On the days of the announcements, there was a mean stock market reaction of -1.02%, with 61% of sample firms experiencing a negative reaction. There is no difference in stock reaction for firms that fail to meet voluntary standards. If the firms offer compensation as a remedy for the failure, this results in a more negative stock market reaction. While the impact of failures has, in general, been associated with a more positive stock market reaction in more recent years, events occurring following the Volkswagen Dieselgate event are associated with a more negative stock market reaction.
Original languageEnglish
Title of host publicationProceedings of 15th ANZAM Operations, Supply Chain and Services Management Symposium
Subtitle of host publicationValue adding role of operations and supply chain management for firms and the society
EditorsPavel Castka, Mark Wilson, Mesbahuddin Chowdhury
PublisherLincoln University, New Zealand
Pages305-324
Number of pages20
ISBN (Electronic)047340205X
ISBN (Print)9780473402051
Publication statusPublished - 13 Jun 2017
Externally publishedYes
Event15th ANZAM Operations, Supply Chain and Services Management Symposium: Value adding role of operations and supply chain management for firms and the society - Queenstown, New Zealand
Duration: 13 Jun 201714 Jun 2017
Conference number: 15

Conference

Conference15th ANZAM Operations, Supply Chain and Services Management Symposium
Abbreviated titleANZAM 2017
CountryNew Zealand
CityQueenstown
Period13/06/1714/06/17

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