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Unethical Conduct & Stock Prices: A case study on the wealth effects of unethical corporate behavior
Södertörn University, School of Social Sciences, Economics.
2019 (English)Independent thesis Advanced level (degree of Master (One Year)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

In the last decade Corporate Social Responsibility (CSR) has become increasingly important and multiple corporations that have been exposed for unethical behavior have been harshly penalized by the market. This study aims at evaluating wealth effects of unethical corporate behavior by doing a case study, in which an in-depth analysis is conducted on four infamous corporate scandals; Wells Fargo, HSBC, Danske Bank, and Volkswagen. Share prices are compared to an approximation of what the prices could have been, had the scandals not been revealed, to give an indication on abnormal returns around the announcement of the corporate scandals. The approximation is based on the share’s previous correlation with market returns. Results of the study are then contrasted to and analyzed with regard to findings of previously conducted event studies on the wealth loss suffered due to exposed unethical behavior. It is found that the corporate scandals resulted in substantial direct wealth losses in terms of market cap value and shareholder wealth for two of our cases, Wells Fargo and Volkswagen. The value decrease that Danske Bank suffered was also substantial, but had a lag in discernible market reactions in comparison to Wells Fargo and Volkswagen. HSBC has in recent years been lagging behind our price approximation, but any direct negative effect from the scandal announcement cannot be observed.

Place, publisher, year, edition, pages
2019. , p. 42
Keywords [en]
Corporate Social Responsibility, shareholder wealth, corporate scandals, unethical corporate behavior
National Category
Economics
Identifiers
URN: urn:nbn:se:sh:diva-38701OAI: oai:DiVA.org:sh-38701DiVA, id: diva2:1341192
Subject / course
Economics
Uppsok
Social and Behavioural Science, Law
Supervisors
Available from: 2019-08-08 Created: 2019-08-07 Last updated: 2019-08-08Bibliographically approved

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • harvard-anglia-ruskin-university
  • apa-old-doi-prefix.csl
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf