Archive for the ‘Financial Impact’ Category

CPSC Civil Penalties on the Rise Again

CPSC Civil Penalties on the Rise Again

In a recent Inform Me: News and Recent Recalls newsletter, we reported that the Consumer Product Safety Commission (CPSC) entered civil penalty settlement agreements with 38 corporations for a total of $9.8 million in fiscal year 2009 (October 2008 – September 2009). The number of companies fined was higher than it has been in at [...]

Mattel Denies Knowing Products Violated the Law – How Will MAT Stock React?

Mattel agreed to pay one of the largest civil penalties in CPSC history, $2.3 million. Perhaps today’s settlement will signal to investors the end of a difficult period for Mattel and a chance to finally move forward. However, the question remains whether today’s settlement will settle the matter in the minds of consumers.

Company Costs of a Product Recall: Incentives to Fix or Ignore Recall Effectiveness Problems (Summary)

Company Costs of a Product Recall: Incentives to Fix or Ignore Recall Effectiveness Problems (Summary)

When I speak with consumers about possible ways to make locating recalled products easier for manufacturers, many balk at the idea, positing that companies would never have any incentive to improve recall effectiveness. For these individuals, the belief is that companies would rather not do everything possible to locate and retrieve defective products in order [...]

The Effect of Product Recalls on Stock Performance (Summary)

In my paper, The Effect of Product Recall on Stock Performance, I discuss findings with regard to how much a company’s stock price changes with the announcement of a product recall. I also discuss studies that show how negative impacts can be mitigated. The full text of the post can be found by clicking the [...]

Company Costs of a Product Recall: Incentives to Fix or Ignore Recall Effectiveness Problems (Full Post)

Company Costs of a Product Recall: Incentives to Fix or Ignore Recall Effectiveness Problems (Full Post)

There are numerous costs involved in conducting a product recall.  Many of these costs vary greatly depending on factors such as the type of product being recalled, the cost and price-point of the product, the number of units recalled, the geographic location of the companies involved and even the demographics of the end-user.  This article [...]

The Effect of Product Recalls on Stock Performance (Full Post)

A 2005 statistical study published in the Quarterly Journal of Business and Economics analyzed the security prices of non-automotive recalls following the announcement of the product recall in the Wall Street Journal (WSJ).[1] [2] The study looked at a sample of 269 product recalls from 1984 through 2003 and reported the mean abnormal returns (MAR) [...]