Firms and Collective Reputation: a Study of the Volkswagen Emissions Scandal

Ruediger Bachmann, Gabriel Ehrlich, Ying Fan, Dimitrije Ruzic and Benjamin Leard

Journal of the European Economic Association, 2023, vol. 21, issue 2, 484-525

Abstract: This paper uses the 2015 Volkswagen (VW) emissions scandal as a natural experiment to provide evidence that collective reputation externalities are economically significant. Using a combination of difference-in-differences and demand estimation approaches, we document a spillover effect from the scandal to the non-VW German auto manufacturers. The spillover amounts to an average drop of $2,057 in consumer valuations of these manufacturers’ vehicles and a 34.6% reduction in their annual sales. We substantiate our interpretation that the estimates reflect a reputation spillover using data on internet search behavior and direct measures of consumer sentiment from Twitter.

Date: 2023
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Related works:
Working Paper: Firms and Collective Reputation: a Study of the Volkswagen Emissions Scandal (2019)
Working Paper: Firms and Collective Reputation: A Study of the Volkswagen Emissions Scandal (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:jeurec:v:21:y:2023:i:2:p:484-525.

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