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Firms and Collective Reputation: the Volkswagen Emissions Scandal as a Case Study

January 8, 2019

DECRG Kuala Lumpur Seminar Series

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  • 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.

     

     

  • Dimitrije Ruzic

    Dimitrije Ruzic is an Assistant Professor of Economics at INSEAD. He obtained an A.B. in Economics from Harvard College, an M.Sc. in Econometrics and Mathematical Economics from the London School of Economics, and a Ph.D. in Economics from the University of Michigan. His research interests span macroeconomics and international trade. Though his projects he works to understand how differences across firms shape macroeconomic outcomes. In the process, he combines models of differentiated firms with firm microdata to explore questions related to productivity trends, the allocation of resources, inequality, and the spillovers of firm reputation. If you cannot find him in his office, please look around the Fontainebleau forest—he might be bouldering.

DETAILS

  • when: Tuesday, January 8, 2019; 12:30 -2:00PM
  • where: World Bank Malaysia Office, Level 3, Sasana Kijang, No. 2, Jalan Dato’ Onn
  • rsvp: Kindly RSVP by Friday, January 4, 2019
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