TY - JOUR T1 - The Effect on Stockholder Wealth of Product Recalls and Government Action: The Case of Toyota's Accelerator Pedal Recall JF - Quarterly Review of Economics and Finance Y1 - 2014 A1 - Gokhale,Jayendra A1 - Brooks,Raymond A1 - Tremblay,Victor J KW - Finance AB - We analyze the effect of Toyota’s faulty accelerator pedal on stockholder wealth. Using the event study methodology, we show that a major recall in January of 2010 caused the company’s cumulative abnormal returns to fall by 19 percent. Continued concerns that Toyota was unable to identify and adequately fix the problem induced the National Highway Traffic Safety Administration to conduct its own investigation in March, 2010. The results of this government investigation exonerated the company and caused Toyota’s cumulative abnormal returns to rise by almost 9 percent. The Toyota case provides an opportunity to study a product recall with both company error and a government action that addressed concerns about the safety of the product. VL - 54 CP - November 2014 U2 - a U4 - 87876405248 ID - 87876405248 ER -