Abstract
This study examines the costs associated with Volkswagen’s diesel emission cheating scandal. This study views the incident as a failure in quality, thus, the costs borne by VW are the costs of quality (COQ). So far, different estimates of the COQ have been suggested at different times because of the contingent nature of the litigations. As most of the pending litigations faced by VW have been resolved over the past seven years, this study revisits the scandal to evaluate the gap between two contrasting approaches, accountingbased and market-based. The cumulative COQ derived from VW financial reports varies between $31.5 billion and $44.8 billion by the end of 2021. However, these figures are below what was reflected in the market, $60.0 billion, when VW settled most litigations in the U.S. This study confirms a large gap, ranging from $15.2 billion to $28.5 billion, between the two measures. This study concludes the gap is likely to be associated with the opportunity costs arising from the scandal, which are ignored in financial reporting.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
