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

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

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 proceeding › Conference contribution › peer-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 language	English
Title of host publication	Proceedings of 15th ANZAM Operations, Supply Chain and Services Management Symposium
Subtitle of host publication	Value adding role of operations and supply chain management for firms and the society
Editors	Pavel Castka, Mark Wilson, Mesbahuddin Chowdhury
Publisher	Lincoln University, New Zealand
Pages	305-324
Number of pages	20
ISBN (Electronic)	047340205X
ISBN (Print)	9780473402051
Publication status	Published - 13 Jun 2017
Externally published	Yes
Event	15th 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 2017 → 14 Jun 2017 Conference number: 15

Conference

Conference	15th ANZAM Operations, Supply Chain and Services Management Symposium
Abbreviated title	ANZAM 2017
Country/Territory	New Zealand
City	Queenstown
Period	13/06/17 → 14/06/17

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 8 Decent Work and Economic Growth
SDG 9 Industry, Innovation, and Infrastructure
SDG 13 Climate Action

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Caught when failing to meet environmental standardsFinal published version, 489 KBLicence: Unspecified

Cite this

Smith, R., Wood, L. C., & Wang, J. X. (2017). Caught when failing to meet environmental standards: The case of the automotive industry. In P. Castka, M. Wilson, & M. Chowdhury (Eds.), Proceedings of 15th ANZAM Operations, Supply Chain and Services Management Symposium: Value adding role of operations and supply chain management for firms and the society (pp. 305-324). Lincoln University, New Zealand.

Smith, Rikki ; Wood, Lincoln C. ; Wang, Jason X. / Caught when failing to meet environmental standards : The case of the automotive industry. Proceedings of 15th ANZAM Operations, Supply Chain and Services Management Symposium: Value adding role of operations and supply chain management for firms and the society. editor / Pavel Castka ; Mark Wilson ; Mesbahuddin Chowdhury. Lincoln University, New Zealand, 2017. pp. 305-324

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abstract = "This research documents that automotive firms{\textquoteright} 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. ",

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Smith, R, Wood, LC & Wang, JX 2017, Caught when failing to meet environmental standards: The case of the automotive industry. in P Castka, M Wilson & M Chowdhury (eds), Proceedings of 15th ANZAM Operations, Supply Chain and Services Management Symposium: Value adding role of operations and supply chain management for firms and the society. Lincoln University, New Zealand, pp. 305-324, 15th ANZAM Operations, Supply Chain and Services Management Symposium, Queenstown, New Zealand, 13/06/17.

Caught when failing to meet environmental standards: The case of the automotive industry. / Smith, Rikki; Wood, Lincoln C.; Wang, Jason X.
Proceedings of 15th ANZAM Operations, Supply Chain and Services Management Symposium: Value adding role of operations and supply chain management for firms and the society. ed. / Pavel Castka; Mark Wilson; Mesbahuddin Chowdhury. Lincoln University, New Zealand, 2017. p. 305-324.

Research output: Chapter in Book/Report/Conference proceeding › Conference contribution › peer-review

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N2 - 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.

AB - 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.

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Smith R, Wood LC, Wang JX. Caught when failing to meet environmental standards: The case of the automotive industry. In Castka P, Wilson M, Chowdhury M, editors, Proceedings of 15th ANZAM Operations, Supply Chain and Services Management Symposium: Value adding role of operations and supply chain management for firms and the society. Lincoln University, New Zealand. 2017. p. 305-324

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

Abstract

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UN SDGs

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