In 2015, between September 18 and September 28, the market capitalization of Volkswagen AG (FRA: VOW) fell from $95 billion to $60 billion. This staggering loss is not commonly seen in stock markets, especially in “blue chips” companies. The massive loss in share price is linked to the emission cheating scandal shaking the fundamentals of one of the biggest car manufacturing in the world. Even months after the occurrences the environmental, governance and social impacts of such misbehavior from Volkswagen’s actions are still largely unclear. It is not possible to know to what extent such activities will affect the company’s shareholders in the long run. In the short run it is possible to observe large government fines and a series of unnecessary extra costs incurred by the company in order to perimeter the damages (Burki, 2015).
Academics and industry experts have been debating over the absolute objective of organizations for decades. Economists argue that the pure aim of any organization should be to maximize shareholders value (Jensen, 2002). The conclusion that derive from such statement are quite straightforward. Nevertheless, the academic discussion that rise from such evidence is more complex. Shareholder value is a concept that could be easily stretched to include a wider focus group. Logically speaking, companies’ performance are affected by the business environment in which they operate. Therefore, shareholder value is indirectly influenced by the entire group of