Public and Private Sanctions for Corporate Misconduct: Evidence from Listed Companies

This paper aims to evaluate the impact that the application of competition legislation exerts on financial markets. The sanctioning process is classified into three key moments: the announcement of an investigation when a case of corporate misconduct is suspected; the imposition of a fine, if applic...

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Autores: Cardone Riportella, Clara, García Olalla, Myriam, Vázquez Ordás, Camilo José|||0000-0003-1162-6802
Tipo de recurso: artículo
Fecha de publicación:2023
País:España
Institución:Universidad de Oviedo (UNIOVI)
Repositorio:RUO. Repositorio Institucional de la Universidad de Oviedo
Idioma:inglés
OAI Identifier:oai:digibuo.uniovi.es:10651/70511
Acceso en línea:https://hdl.handle.net/10651/70511
https://dx.doi.org/10.1093/joclec/nhad010
Access Level:acceso abierto
Palabra clave:Public sanction
Reputational sanction
Event study
Market efficiency
Spanish listed companies
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spelling Public and Private Sanctions for Corporate Misconduct: Evidence from Listed CompaniesCardone Riportella, ClaraGarcía Olalla, MyriamVázquez Ordás, Camilo José|||0000-0003-1162-6802Public sanctionReputational sanctionEvent studyMarket efficiencySpanish listed companiesThis paper aims to evaluate the impact that the application of competition legislation exerts on financial markets. The sanctioning process is classified into three key moments: the announcement of an investigation when a case of corporate misconduct is suspected; the imposition of a fine, if applicable; and, finally, the rectification or ratification of the sanction. The impact of these announcements on share prices between 2013 and 2021 is analyzed using the event study methodology. This research focuses on companies listed on the Spanish stock exchange, yielding 22 firms with 95 observations. The results show a negative and significant market reaction to the series of announcements. While this reaction intensifies if the fine is ratified, the response becomes positive when the sanction is rectified and annulled. In conclusion, the evidence found allows us to state that the market does in effect penalize corporate misconduct. Furthermore, the public sanction imposed by the competent authority is then followed by a private sanction, which manifests itself as a drop in market value. This is consistent with a hypothetical effect of reputational loss, especially in those cases in which the sanction is more significant in relation to the company's market value.The authors acknowledge the financial support from the Junta de Andalucía of Spain (SEJ_555); the Ministry of Science and Innovation of Spain (PID2020-113367RB-100); and from the European Commission (20132-EPP-1-2020-1-ES-EPPJMO-MODULE).Oxford University Press20232023-09-01journal articlehttp://purl.org/coar/resource_type/c_6501AMhttp://purl.org/coar/version/c_ab4af688f83e57aainfo:eu-repo/semantics/articlehttps://hdl.handle.net/10651/70511https://dx.doi.org/10.1093/joclec/nhad010reponame:RUO. Repositorio Institucional de la Universidad de Oviedoinstname:Universidad de Oviedo (UNIOVI)Inglésengopen accesshttp://purl.org/coar/access_right/c_abf2Attribution-NonCommercial-NoDerivatives 4.0 Internationalhttp://creativecommons.org/licenses/by-nc-nd/4.0/info:eu-repo/semantics/openAccessoai:digibuo.uniovi.es:10651/705112026-06-07T06:38:51Z
dc.title.none.fl_str_mv Public and Private Sanctions for Corporate Misconduct: Evidence from Listed Companies
title Public and Private Sanctions for Corporate Misconduct: Evidence from Listed Companies
spellingShingle Public and Private Sanctions for Corporate Misconduct: Evidence from Listed Companies
Cardone Riportella, Clara
Public sanction
Reputational sanction
Event study
Market efficiency
Spanish listed companies
title_short Public and Private Sanctions for Corporate Misconduct: Evidence from Listed Companies
title_full Public and Private Sanctions for Corporate Misconduct: Evidence from Listed Companies
title_fullStr Public and Private Sanctions for Corporate Misconduct: Evidence from Listed Companies
title_full_unstemmed Public and Private Sanctions for Corporate Misconduct: Evidence from Listed Companies
title_sort Public and Private Sanctions for Corporate Misconduct: Evidence from Listed Companies
dc.creator.none.fl_str_mv Cardone Riportella, Clara
García Olalla, Myriam
Vázquez Ordás, Camilo José|||0000-0003-1162-6802
author Cardone Riportella, Clara
author_facet Cardone Riportella, Clara
García Olalla, Myriam
Vázquez Ordás, Camilo José|||0000-0003-1162-6802
author_role author
author2 García Olalla, Myriam
Vázquez Ordás, Camilo José|||0000-0003-1162-6802
author2_role author
author
dc.subject.none.fl_str_mv Public sanction
Reputational sanction
Event study
Market efficiency
Spanish listed companies
topic Public sanction
Reputational sanction
Event study
Market efficiency
Spanish listed companies
description This paper aims to evaluate the impact that the application of competition legislation exerts on financial markets. The sanctioning process is classified into three key moments: the announcement of an investigation when a case of corporate misconduct is suspected; the imposition of a fine, if applicable; and, finally, the rectification or ratification of the sanction. The impact of these announcements on share prices between 2013 and 2021 is analyzed using the event study methodology. This research focuses on companies listed on the Spanish stock exchange, yielding 22 firms with 95 observations. The results show a negative and significant market reaction to the series of announcements. While this reaction intensifies if the fine is ratified, the response becomes positive when the sanction is rectified and annulled. In conclusion, the evidence found allows us to state that the market does in effect penalize corporate misconduct. Furthermore, the public sanction imposed by the competent authority is then followed by a private sanction, which manifests itself as a drop in market value. This is consistent with a hypothetical effect of reputational loss, especially in those cases in which the sanction is more significant in relation to the company's market value.
publishDate 2023
dc.date.none.fl_str_mv 2023
2023-09-01
dc.type.none.fl_str_mv journal article
http://purl.org/coar/resource_type/c_6501
AM
http://purl.org/coar/version/c_ab4af688f83e57aa
dc.type.openaire.fl_str_mv info:eu-repo/semantics/article
format article
dc.identifier.none.fl_str_mv https://hdl.handle.net/10651/70511
https://dx.doi.org/10.1093/joclec/nhad010
url https://hdl.handle.net/10651/70511
https://dx.doi.org/10.1093/joclec/nhad010
dc.language.none.fl_str_mv Inglés
eng
language_invalid_str_mv Inglés
language eng
dc.rights.none.fl_str_mv open access
http://purl.org/coar/access_right/c_abf2
Attribution-NonCommercial-NoDerivatives 4.0 International
http://creativecommons.org/licenses/by-nc-nd/4.0/
dc.rights.openaire.fl_str_mv info:eu-repo/semantics/openAccess
rights_invalid_str_mv open access
http://purl.org/coar/access_right/c_abf2
Attribution-NonCommercial-NoDerivatives 4.0 International
http://creativecommons.org/licenses/by-nc-nd/4.0/
eu_rights_str_mv openAccess
dc.publisher.none.fl_str_mv Oxford University Press
publisher.none.fl_str_mv Oxford University Press
dc.source.none.fl_str_mv reponame:RUO. Repositorio Institucional de la Universidad de Oviedo
instname:Universidad de Oviedo (UNIOVI)
instname_str Universidad de Oviedo (UNIOVI)
reponame_str RUO. Repositorio Institucional de la Universidad de Oviedo
collection RUO. Repositorio Institucional de la Universidad de Oviedo
repository.name.fl_str_mv
repository.mail.fl_str_mv
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