Reported corporate misconducts : the impact on the financial markets

Ichev, Riste (author)

This study empirically examines how reported corporate misconducts affect the stock returns of US firms. As the reported misconducts are broadcasted in the newspaper outlets, the cumulative abnormal return (CAR) is -4.1%. Involvement in a reported corporate misconduct gets punished by market participants especially when the act of reported misconduct is blamed on the level of the corporation rather than in involvement of a specific individual, when reported misconducts take place in the home market, and when the linguistic tone used in the newspaper article is negative. Financial penalties imposed, firm size, leverage, revenue growth, and the level of firm foreign exposure are found to have significant impact on the returns during the period of observation. The results suggest that investors recognize the importance to penalize firms in the financial markets when firms act unethically.

• Language: English
• Keywords: corporations, financial markets, investments, finance, stock markets, linguistic geography, human rights, regression analysis, economic impact analysis, speech signal processing
• Work type: Article
• Typology: 1.01 - Original Scientific Article
• Organization: EF - School of Economics and Business
• Publication status: Published
• Publication version: Version of Record
• Year: 2022
• Number of pages: 12 str.
• Numbering: Vol. 18, iss. 2, art. e0276637
• PID: 20.500.12556/RUL-145693
• UDC: 005.3
• ISSN on article: 1932-6203
• DOI: 10.1371/journal.pone.0276637
• COBISS.SI-ID: 125803523
• Publication date in RUL: 09.05.2023

Record is a part of a journal

• Title: PloS one
• Publisher: Public Library of Science
• ISSN: 1932-6203
• COBISS.SI-ID: 2005896

Licences

• License: CC BY 4.0, Creative Commons Attribution 4.0 International
• Link: http://creativecommons.org/licenses/by/4.0/
• Description: This is the standard Creative Commons license that gives others maximum freedom to do what they want with the work as long as they credit the author.

Secondary language

• Language: Slovenian
• Keywords: korporacije, finančni trg, investicije

Projects

• Funder: ARRS - Slovenian Research Agency
• Project number: P5-0161
• Name: Izzivi vlagateljev, podjetij, finančnih institucij in države v negotovem evropskem gospodarskem okolju