Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/174928
Authors: 
Bachmann, Ruediger
Ehrlich, Gabriel
Ruzic, Dimitrije
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper No. 6805
Abstract: 
This paper uses the 2015 Volkswagen emissions scandal as a natural experiment to provide causal evidence that group reputation externalities matter for firms. Our estimates show statistically and economically significant declines in the U.S. sales and stock returns of, as well as public sentiment towards, BMW, Mercedes-Benz, and Smart as a result of the Volkswagen scandal. In particular, the scandal reduced the sales of these non-Volkswagen German manufacturers by approximately 76,000 vehicles over the following year, leading to a loss of approximately $3.7 billion of revenue. Volkswagen’s malfeasance materially harmed the group reputation of “German car engineering” in the United States.
Subjects: 
automobiles
collective reputation
country reputation
difference-in-differences
event study
Google trends
firm reputation
natural experiment
reputation externalities
Twitter sentiment
Volkswagen emissions scandal
JEL: 
D12
D90
F23
L14
L62
Document Type: 
Working Paper

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