Stock Market Reactions to Auto Manufacturers’ Environmental Failures

Lincoln C. Wood, Jason X. Wang, Linh N.K. Duong, Torsten Reiners, Rikki Smith

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

The automotive sector must meet strict regulations to increase mobility while reducing emissions to demonstrate environmental stewardship. Trust in the promise of a sustainable Fahrvergnügen was broken with recent scandals like Dieselgate denting the confidence of regulators and consumers. Overpromising on sustainable innovative technology resulted in unethical behavior, deceit, and failure to meet promised standards. We consider to what extent societal disapproval was evident in the stock market reaction to these events. We sampled 41 announcements (1984 to 2016) and observed a mean stock market reaction of -1.01%. There was no difference in the stock reaction in firms failing governmental vs. voluntary standards and more negative reactions for events following Dieselgate or when compensation was offered. The severity of the reaction to unethical misuse of environmental credentials should encourage maintaining promised environmental performances as a macromarketing strategy.

Original languageEnglish
Pages (from-to)364-382
Number of pages19
JournalJournal of Macromarketing
Volume38
Issue number4
Early online date11 Jun 2018
DOIs
Publication statusPublished - 1 Dec 2018
Externally publishedYes

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Stock market reaction
Environmental performance
Unethical behavior
Severity
Confidence
Stewardship
Innovative technologies
Announcement
Scandal
Macromarketing

Cite this

Wood, Lincoln C. ; Wang, Jason X. ; Duong, Linh N.K. ; Reiners, Torsten ; Smith, Rikki. / Stock Market Reactions to Auto Manufacturers’ Environmental Failures. In: Journal of Macromarketing. 2018 ; Vol. 38, No. 4. pp. 364-382.
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Stock Market Reactions to Auto Manufacturers’ Environmental Failures. / Wood, Lincoln C.; Wang, Jason X.; Duong, Linh N.K.; Reiners, Torsten; Smith, Rikki.

In: Journal of Macromarketing, Vol. 38, No. 4, 01.12.2018, p. 364-382.

Research output: Contribution to journalArticle

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