The Effect On Shareholders’ Wealth In Companies Of The Automotive Industry, After The Volkswagen Announcement Of Cheating In The Gas Emission Contaminants Of Its Vehicles, Efecto En La Riqueza De Los Accionistas De Las Companias Lideres Del Mercado Automotriz Mundial Tras El Anuncio De Engano De Volkswagen En La Emision De Gases Contaminantes De Sus Vehiculos

This article uses event study methodology, through the application of seemingly unrelated regressions (SUR), to estimate the effect of Volkswagen executives announcement about their cheating in gas emission contaminants of vehicles produced and sold by the company on the stock returns of Volkswagen as well as on the leading companies in the global automotive industry. Empirical results indicate significant negative abnormal returns of -17.41% for shareholders of Volkswagen on the day of announcement. In addition, two other companies were affected negatively, Daimler and BMW. Therefore, this announcement was quickly incorporated into the stock prices of these German companies which compete in the global automotive industry. This reflects the punishment exercised by global investors to the unethical behavior of the key executives of Volkswagen. The article ends with the implications of this type of behavior on shareholders' wealth and on other stakeholders of the companies