The purpose of this study is to analyse the change of the stock prices of a general trading firm or insurance firm under the condition that the firm's unethical behavior has been reported by mass media. For this study data employed are those reports of daily newspapers during 1. 1. 1998 and 31. 12. 2007, and then drew out the event on conditions that a news-caste reported on televisions, This study's Methodology is event study, The event window is (-15, +15) around the event day(0) and the estimation window (-70, -16).
The analysis shows that the actual stock performance for those companies is lower than the expected returns and the dramatic decrease in CAR (Cumulative Average returns).
General trading firms' Average abnormal returns is -0.00265 from the event day(0) to (-15, +15), and CAR(-15, +15) is -0.08228. From the result we can induce those reports negatively affect general trading firms' stock price to be 8.228% down. And insurance firms' average abnormal returns is -0.00369 from the event day(0) to (-15, +15), and CAR(-15, +l5) is -0.113724. From the result we can induce those reports negatively affect insurance firm's stock price to be 11.3724% down.
Social responsibility or ethical behavior influences Insurance firms and Genernal trading firms' values. Unethical conduct by firms has impact on the shareholders of the firms by lowering the stock price for an appreciable period of time.