Thou shalt not bear false witness against your customers: Cultural norms and the Volkswagen scandal

Iftekhar Hasan, Felix Noth and Lena Tonzer

No 21/2019, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: This paper investigates whether cultural norms shaped by religion drive consumer decisions after a corporate scandal. We exploit the unexpected notice of violation by the US Environmental Protection Agency in September 2015, accusing the car producer Volkswagen (VW) to have used software to manipulate car emission values during test phases. Using a difference-in-difference model, we show that new registrations of VW (diesel) cars decline significantly in German counties with a high share of Protestants following the VW scandal. Our results suggest that the enforcement culture rooted in Protestantism affects consumer decisions and penalises corporate fraud.

Keywords: religion; corporate scandal; consumer choice; climate change (search for similar items in EconPapers)
JEL-codes: D12 O30 Q50 Z12 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-ene, nep-env, nep-eur and nep-tre
Note: A revised version of this paper has been published as Hasan, Iftekhar; Noth, Felix; Tonzer, Lena: Cultural Norms and Corporate Fraud: Evidence from the Volkswagen Scandal. IWH Discussion Paper 24/2020. Halle (Saale) 2020: http://hdl.handle.net/10419/226484
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:212019

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