Importance of Product Recalls ◾ 25
Researchers have also investigated how decisions about how to conduct a recall
impact the stock market. Rupp (2001) found that involuntary recalls, which were
hypothesized to present a low-quality signal and elicit more damage to shareholders
than voluntary recalls do, were not found to be associated with greater shareholder
losses. Chen et al. (2008), however, found that a voluntary product recall strategy
had a negative eect on a rm’s nancial value when compared to an involuntary
strategy. Examples of product recall research from the nancial perspective are
contained in Section IV. Chapter 13 studies the stock market eect of product
recall announcements in several industries in China, while Chapter ...