| Summary: | 碩士 === 國立成功大學 === 國際企業研究所碩博士班 === 101 === This paper examined whether the long-term stock abnormal return would be affected by product recall announcements. Past literatures revealed that firms who announced recall would face negative impacts on financial performance in the short run, such as sales volume, stock price. Theoretically, if recalling firms show their responsibility for the defective products, it will lower the negative influence of stakeholders. However, previous empirical evidences indicated that passive recall is more positive than proactive. In this research, we attempt to test whether recall announcement will influence firms’ long-term stock abnormal return, also try to figure out which kind of recall strategy will bring better result for firms in the long run. Based on a sample of 393 recall announcements over 1991-2008, while using Fama ＆ French three-factor model and Carhart four-factor model as analysis method . We find that there is no significant evidence showing the recall announcement will affect firms’ performance. On the other hand, there is no significant evidence showing either proactive or passive recall strategies will affect firms’ performance as well. Therefore, no matter proactive or passive recall, no evidence supports that a recall announcement will influence the long-term stock abnormal return of the recalling firm.
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