Volkswagen Emission Scandal and Corporate Social Responsibility – A Case Study

Abstract

Corporate social responsibility plays a high-profile role in today's competitive market and any unethical behavior done by a corporate leads to objectionable consequences. These consequences often have influence on businesses activity in a negative way. The purpose of this study is to examine the relationship between the social responsibility of an organization and three variables: the stock market of the organization, the financial performance of the organization, and the reputation index by the organization set during the scandal. The study was carried out on the latest corporate social responsibility related scandal escalated in the Volkswagen corporation, known as "Diesel gate" or the emission scandal. While other authors have analyzed this scandal by focusing on one variable, we concentrated on integrating the general picture of key issues. By studying the quantitative data from 2013 to 2016, the research evidenced that unethical behavior of well prominent company unfold negative effect on the corporate's stock price, financial performance and reputation as well.