| The avalanche of product recalls since 2007 have caused serious concerns about the product safety issues in global outsourcing. While problems with consumer product safety have continued to increase in recent years, little academic research has directly addressed the operational and supply chain issues that lead to unsafe products and recalls.;In the first essay, using an event study of toy recalls made in U.S., I measure the financial impact of product recalls by estimating the abnormal stock returns around the date when a product recall is publicly announced. A product recall is found to be associated with an abnormal decrease in shareholder wealth. In addition, I examine the impact of the type of the firm, firm size, degree of product hazard and growth prospect on the abnormal stock returns of the recall companies.;In the second essay, I address two key issues related to the shareholder wealth effect of a consumer product recall on retailers. First, my research empirically measures the financial impact of a consumer product recall announcement by a retailer. Second, this study conducts a cross-sectional analysis of recalls issued by retailers to investigate the impact of several factors that account for the differences in the abnormal change of firm value, including remedy strategy, retailer size, recall magnitude and degree of product hazard.;In the third essay, I proceed to study the risk associated with a product recall. To quantitatively measure the risk of a product recall, I use an event history analysis to study the hazard rate associated with a product recall. To search for the source of a product recall, I hypothesize that the risk of a recall increases or decreases across time by country of origin and organizational learning. |
