An Empirical Study On The Impact Of Product Recall On Shareholder Wealth In The Context Of Social Media

In recent years,domestic product recalls have become more and more frequent,and the quality and safety problems have become more and more prominent,which not only seriously threatens people's daily life,but also severely tests the survival and development of enterprises.The existence of online media has rendered a more complex atmosphere for the recall incident,and the dissemination of a large number of misleading information has intensified the impact of product recall on the public and enterprises.The recall of defective products harms the interests of shareholders,and the recall information of different forms and sources has different effects on the changes of shareholder wealth.Previous research on product recall mostly focused on the occurrence level of the event,and the research on the impact of recall information was too shallow and simple.Therefore,in the context of social media,the impact of product recall on shareholder wealth changes deserves a more rigorous in-depth analysis.Taking the more mature automobile industry of domestic product recall as the research object,this paper manually collected and sorted out 88 recall announcements of 26 domestic listed vehicle companies from 2008 to 2017,and makes an empirical test through event study and data analysis.This study mainly examines whether the product recall will lead to negative changes in shareholder wealth.On this basis,this paper tries to clarify the effect of recall time,recall volume and post-recall remedy,and social media information such as the valence and dispersion of online word-of-mouth on the change of shareholder wealth.The empirical results show that:(1)Product recall has a significant negative impact on shareholder wealth.In the short recall window,the stock markets of most of the companies involved showed a clear negative trend.(2)The regression results of all dimensions of product recall show that the recall time,recall volume and post-recall remedy have a significant negative impact on shareholder wealth.The longer the recall interval,the more products involved,the more negative changes in shareholder wealth.When the enterprise takes the remedy measure of "replacement",the negative change of shareholder wealth is more significant.(3)In terms of social media information,the valence of online word-of-mouth strengthens the negative correlation between the recall time and shareholder wealth.The dispersion of online word-ofmouth makes the negative effect between recall time and shareholder wealth,recall volume and shareholder wealth become stronger.To sum up,based on the background of product recall in the automobile industry,this paper studies the impact of recall events on shareholder wealth,and deeply analyzes the impact of recall information from announcement and social media on shareholder wealth.And some valuable research conclusions are drawn.According to the research conclusion and process,this paper also puts forward practical suggestions and prospects,hoping to bring inspiration for recall management and future research.