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    Stock Market Reactions to Auto Manufacturers’ Environmental Failures

    267360.pdf (367.4Kb)
    Access Status
    Open access
    Authors
    Wood, Lincoln
    Wang, J.
    Duong, L.
    Reiners, Torsten
    Smith, R.
    Date
    2018
    Type
    Journal Article
    
    Metadata
    Show full item record
    Citation
    Wood, L. and Wang, J. and Duong, L. and Reiners, T. and Smith, R. 2018. Stock Market Reactions to Auto Manufacturers’ Environmental Failures. Journal of Macromarketing. 38 (4): pp. 364-382.
    Source Title
    Journal of Macromarketing
    DOI
    10.1177/0276146718781915
    ISSN
    0276-1467
    School
    School of Management
    Remarks

    Wood, L. and Wang, J. and Duong, L. and Reiners, T. and Smith, R. 2018. Stock Market Reactions to Auto Manufacturers’ Environmental Failures. Journal of Macromarketing. Copyright © The Author(s) 2018. Reprinted by permission of SAGE Publications

    URI
    http://hdl.handle.net/20.500.11937/69770
    Collection
    • Curtin Research Publications
    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.

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