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This paper examines the relationship between the discoveries of illegal behavior by companies on the stock price. It examines whether shareholders care about illegal corporate behaviour and punish companies by driving the stock price down. The empirical results show that stock prices react negatively on the announcement date of corporate malfeasance. The authors examine different impacts of the type of illegal behaviour, the level of misconduct, the phase and the magnitude. Responsible corporate behaviour received a lot of attention during the last decade in the CSR literature.
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