Stock Market Reactions to Auto Manufacturers’ Environmental Failures

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

doi:10.1177/0276146718781915

Cited by 44 publications

(26 citation statements)

References 120 publications

(166 reference statements)

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“…Based on VW's market capitalization on the event date, CARs are equivalent to an absolute, abnormal loss in market value of EUR −13.9 billion to EUR −29.7 billion, illustrating the tremendous financial impact of the announcement event. Thus, our findings for VW are in line with prior event studies on Dieselgate (Barth et al, 2017; Fracarolli Nunes & Lee Park, 2016; Griffin & Lont, 2018; Wood et al, 2018). However, the additional analysis of subsequent Dieselgate events following the EPA announcement did not yield any significant results, indicating that these events are not relevant for VW.…”

Section: Resultssupporting

confidence: 92%

“…We complement their research approach by considering a longer timeline (i.e., multiple events) in our examination. On a broader scale, Wood et al (2018)…”

Section: Introductionmentioning

confidence: 99%

“…We complement their research approach by considering a longer timeline (i.e., multiple events) in our examination. On a broader scale, Wood et al (2018) examined the abnormal stock reaction to 41 car manufacturers' environmental failure announcements (i.e., unethical behavior, deception, and failure to meet standards) for an international set of firms. They found highly significant, negative, mean ARs for the announcement of a car manufacturer's environmental failure with results being robust against variation in estimation models.…”

Section: Introductionmentioning

confidence: 99%

“…Existing studies explain very well the negative stock returns for VW, as well as a negative spillover (contagion) effect on industry peers and suppliers around the initial EPA announcement (Barth, Eckert, Gatzert, & Scholz, 2017;Fracarolli Nunes & Lee Park, 2016;Griffin & Lont, 2018;Wood, Wang, Duong, Reiners, & Smith, 2018).…”

mentioning

confidence: 97%

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The contagion effect of environmental violations: The case of Dieselgate in Germany

Bouzzine

Lueg

2020

Bus Strat Env

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We examine how environmental violations affect the stock returns of the violating firm and how these financial implications then spread to industry peers. Volkswagen's diesel emissions scandal (Dieselgate) and the German automotive industry serve as a seminal case for the examination. Research often limits examinations of corporate environmental scandals to the primary event announcement. Yet the Dieselgate scandal exhibits a processual character that requires the examination of multiple events over time. We identify 10 Dieselgate events and employ event study methodology to detect abnormal stock reactions. Based on agency and signaling theory, the results indicate that Dieselgate has harmed the stock returns of Volkswagen and its industry peers substantially. Surprisingly, Volkswagen suffered financial damage only upon the initial event of Dieselgate. Subsequent events had significant effects only on industry peers. These findings contribute comprehensively to the research of environmental misconduct and provide valuable implications for practitioners.

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Section: Resultssupporting

confidence: 92%

“…We complement their research approach by considering a longer timeline (i.e., multiple events) in our examination. On a broader scale, Wood et al (2018)…”

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 97%

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The contagion effect of environmental violations: The case of Dieselgate in Germany

Bouzzine

Lueg

2020

Bus Strat Env

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“…A search of the Web of Science database for Dieselgate articles that appeared in marketing journals uncovered only six studies offering an analysis of the scandal or addressing organizational unethical behavior (Raman, Gag, and Thapliyal 2019) or "deceptive manipulation" (Siano et al 2017) linked to the misuse of environmental credentials (Wood et al 2018) and to greenwashing (Castille, Buckner, and Thoroughgood 2018). Such wrongdoing had a negative impact on stock returns and resulted in adverse consumer engagement with the scandalized brands (Thaler, Herbst, and Merz 2018).…”

Section: Introductionmentioning

confidence: 99%

The Dark Side of Market Practices: A Concerned View ofDieselgatein the Automotive Market System

Mele

Spena

2020

Journal of Macromarketing

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The paper examines Dieselgate by focusing on the role of actors in performing in and shaping the market, as a macromarketing issue. The focus on the automotive market system is due to the need to “make space for concern” and to become reflexive about the emergent dark side of its practices. To account for the practices of actors, a discourse analysis is used for the examination of the linguistic elements associated with the construction of social phenomena. This paper addresses the dark side of market practices. Market practices that are performed through mistakes and misconduct exert adverse effects on actors in their value co-creation processes. This investigation of Dieselgate in the automotive market system offers three main contributions: (1) a set of adverse constructs; (2) an understanding of the roles that such adverse factors and controversies play in market practices and (3) a multiplicity of viewpoints, concerns and controversies.

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Toward sustainable automobility: Insights from a stewardship literature review of the industry

Dodd,

Cheong,

Hoffmann

et al. 2024

Bus Strat Env

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The automotive industry is actively pursuing a course of sustainable development; however, to date, progress has been limited. This is because a truly sustainable future requires a substantial and transformative approach to automobility. Some scholars argue that this transformative approach might be found by exploring an industry transition based on stewardship rather than the current status quo of incremental change. Hence, as a way of offering new insights to stimulate action for sustainability, this study presents the first comprehensive review of stewardship in the automotive sector. From an analysis of 161 peer‐reviewed articles published between 1990 and 2022, we identified two underconceptualized forms of stewardship—environmental and social—both of which have an interconnected relationship. Environmental stewardship involves actions that address ecological challenges, while social stewardship pertains to broader, positive impacts on communities. We argue that understanding the interplay between these different forms of stewardship is crucial for achieving comprehensive sustainability outcomes. Additionally, this research identifies gaps in the literature and outlines areas for future research to help both managers and society navigate the complex sustainability issues facing the automotive industry.

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Stock Market Reactions to Auto Manufacturers’ Environmental Failures

Cited by 44 publications

References 120 publications

The contagion effect of environmental violations: The case of Dieselgate in Germany

The contagion effect of environmental violations: The case of Dieselgate in Germany

The Dark Side of Market Practices: A Concerned View ofDieselgatein the Automotive Market System

Toward sustainable automobility: Insights from a stewardship literature review of the industry

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