Market Reaction to Media Reports of Unethical and Irresponsible Corporate Behavior (2007)

While evidence exists suggesting that irresponsible corporate behaviour may lead to decreased shareholder wealth (Frooman 1997), one cannot help but question the generalizability of these results when companies such as Exxon, an organization well known for its environmental problems, remains at the top of the 2006 Fortune 500 list. This paper shows with regards to news of irresponsible behaviour, the market punishes smaller, less capitalized firms but not necessarily the very large and highly capitalized companies.