The deterrent to dubious corporate behavior: Profitability, probability and safety recalls

Research output: Contribution to journalArticlepeer-review

150 Scopus citations

Abstract

In response to findings of abnormal stock market reactions following such dubious corporate behaviors as bribery, fraud, and the production of hazardous products, some researchers have argued that the stock market reaction is a sufficient deterrent to these behaviors so that additional regulation is not necessary. In this paper we examine stock market returns as a deterrent to dubious behavior in the production of defective automobiles. Relying on a broader range of assumptions about managerial behavior than are used in previous studies, we question the efficacy of the market as an instrument of social control.

Original languageEnglish (US)
Pages (from-to)233-250
Number of pages18
JournalStrategic Management Journal
Volume10
Issue number3
DOIs
StatePublished - Jan 1 1989

Fingerprint

Dive into the research topics of 'The deterrent to dubious corporate behavior: Profitability, probability and safety recalls'. Together they form a unique fingerprint.

Cite this