Product recalls and security prices: New evidence from the US market
M. Kabir Hassan () and
Journal of Economics and Business, 2017, vol. 93, issue C, 62-79
We examine 1460 product recalls that were announced by U.S Official Agencies between January 1990 and December 2014. Consistent with previous research, we report statistically significant negative abnormal returns during the announcement dates. Moreover, our results suggest two main objectives. First, we find that the effect of product recalls vary for industries in terms of operation and competition. Second, we show that recall announcements cause spillover effect at industry where rival firms receive short term positive abnormal returns during announcement dates. Over post-announcement periods, cumulative abnormal returns (CARs) lose significance and results are robust for both selected market index and estimation method.
Keywords: Product recall; Market reaction; Stock valuation; Event study; Abnormal return (search for similar items in EconPapers)
JEL-codes: G3 G14 M30 M48 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:93:y:2017:i:c:p:62-79
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