What are the potential risks to a company of unethical behaviors by employees? What are the potential risks to the public and to stakeholders?
Volkswagen paid a big price imme- the capital budget roughly 8%-the diately. daysEPA and the company suspended U.S. sales have defeat devices. Within a week, its outstanding five-year debt doubled, scandal in the U.S. alone to roughly and Winterkorn resigned. Within a Baby You Can Drive My Car-Just Not a WW Diesel Volkswagen had come a long way. industry to come up with an inexpen- ww to recall nearly 500,000 diesel cars, crashed during the Great Recession. In 1934, Hitler challenged German sive vehicle for ordinary families--"a People's Car." Ferdinand Porsche's design got the nod, and construction of all 2015 and 2016 models alleged to guilty in U.S. court to conspiracy and In March 2017, Volkswagen pled began on a factory to produce w stock plummeted 33%, the yield on pushed the cost of the emissions obstruction of justice. The record fine Beetles in modern-day Wolfsburg, Germany-still the corporate head- quarters. By 2015, W was the world's month, Standard & Poor's downgraded income for 2014. For its ethical trans- second largest automaker, producing the company's short and long-term times the 10.2 million cars annually. Not content debt from A to A- and indicated further earnings but also growth opportuni- WW saw not only with second, CEO Martin Winterkorn announced plans to pass Toyota and ties squashed like a bug. lead the industry "economically and The U.S. boasts the world's largest Then, on September 18, 2015, staggering government fines and civil auto market but also the toughest Volkswagen's fortunes changed. The settlements. Even worse, the scandal emissions standards. Volkswagen U.S. Environmental Protection Agency was damaging the brand-sales of believed boosting U.S. sales with CPAcharged the company with delib- ww group cars worldwide fell 5.3% in "clean diesel" cars was key to over taking Toyota. What role did WW's erately programming diesel engines on eight passenger models to fool took the first hit. Net present value was desire to be top automaker play in the emissions scandal? emissions tests. Allegedly, "defeat under assault from two directions-a devices" enabled the cars to meet higher cost of capital and lower Ferdinand Pich, grandson of Fer- government standards during testing, expected cash flows. With lower credit dinand Porsche, served as Volkswa- despite spewing up to 40 times per- ratings, WW would now pay more for gen's CEO from 1993 to 2002 and missible levels of nitrogen-oxide pol- debt financing, Declining sales meant board chairman until 2015. He also Utants in ordinary driving. W later lower expected cash flows from R&D selected the next two CEOs (includ- ing Winterkorn). What role did insider conceded that roughly 11 million cars and new factories. Accordingly, w worldwide contained such devices. forgot about burying Toyota and cut succession play in the scandal? downgrades were possible. By November, it was clear the scandal wasn't going away. On top of the cost of recalls, Volkswagen faced ecologically" by 2018
