THE SCANDAL EFFECT

Boris Groysberg is a professor of business administration at Harvard Business School and a coauthor, with Michael Slind, of Talk, Inc. (Harvard Business Review Press, 2012). Eric Lin is an assistant professor in the Department of Behavioral Sciences and Leadership, United States Military Academy. George Serafeim is the Jakurski Family Associate Professor of Business Administration at Harvard Business School. Robin Abrahams is a research associate at Harvard Business School. IN September 2015 Volkswagen was found to have intentionally set controls on its diesel engines to misrepresent their emissions levels. Some 11 million cars worldwide had the “defeat” program installed. This discovery led to an immediate plunge in Volkswagen’s stock price; government investigations in North America, Europe, and Asia; the resignation of its CEO and the suspension of other executives; the company’s…