The contagion effect of environmental violations: The case of Dieselgate in Germany
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In: Business Strategy and the Environment, Vol. 29, No. 8, 12.2020, p. 3187-3202.
Research output: Journal contributions › Journal articles › Research › peer-review
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RIS
TY - JOUR
T1 - The contagion effect of environmental violations
T2 - The case of Dieselgate in Germany
AU - Bouzzine, Yassin Denis
AU - Lueg, Rainer
N1 - Publisher Copyright: © 2020 The Authors. Business Strategy and The Environment published by ERP Environment and John Wiley & Sons Ltd
PY - 2020/12
Y1 - 2020/12
N2 - 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 aseminal case for the examination. Research often limits examinations of corporateenvironmental scandals to the primary event announcement. Yet the Dieselgate scandal exhibits a processual character that requires the examination of multiple events overtime. 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 misconductand provide valuable implications for practitioners.
AB - 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 aseminal case for the examination. Research often limits examinations of corporateenvironmental scandals to the primary event announcement. Yet the Dieselgate scandal exhibits a processual character that requires the examination of multiple events overtime. 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 misconductand provide valuable implications for practitioners.
KW - Management studies
KW - business model
KW - contagion effect
KW - dieselgate
KW - environmental violation
KW - event study
KW - german automotive industry
UR - http://www.scopus.com/inward/record.url?scp=85087620327&partnerID=8YFLogxK
U2 - 10.1002/bse.2566
DO - 10.1002/bse.2566
M3 - Journal articles
VL - 29
SP - 3187
EP - 3202
JO - Business Strategy and the Environment
JF - Business Strategy and the Environment
SN - 0964-4733
IS - 8
ER -