Cultural norms and corporate fraud: Evidence from the Volkswagen scandal

Iftekhar Hasan, Felix Noth and Lena Tonzer

Journal of Corporate Finance, 2023, vol. 82, issue C

Abstract: We examine a corporate governance role of local culture via its impact on consumer behavior following corporate scandals. Our proxy for culture is the presence of local Protestantism. Exploiting the unexpected nature of the Volkswagen (VW) diesel scandal in September 2015, we show that new registrations of VW cars decline significantly in German counties with a Protestant majority following the VW scandal. Further survey evidence shows that, compared to Catholics, Protestants respond significantly more negatively to fraud but not to environmental issues. Our findings suggest that the enforcement culture in Protestantism facilitates penalizing corporate fraud.

Keywords: Religion; Corporate scandal; Consumer choice; Protestantism (search for similar items in EconPapers)
JEL-codes: D12 O30 Q50 Z12 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Cultural norms and corporate fraud: Evidence from the Volkswagen scandal (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:82:y:2023:i:c:s0929119923000925

DOI: 10.1016/j.jcorpfin.2023.102443

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