Do Regulators’ Defect Investigations Deter Manufacturers from Procrastinating Recalls? - The Case of U.S. Automobile Recalls

Key Points

• The research analyzes whether regulatory investigations remove manufacturers' incentives to delay recalls.
• Empirical analysis using a truncated negative binomial regression model
• Manufacturers tend to procrastinate recalls when defect risk is high.
• Delay occurs regardless of whether recalls are mandatory or voluntary.
• Investigations deter delay until they are initiated, as manufacturers remain uncertain of outcomes.
• Lower defect risk correlates with shorter time from investigation initiation to recall announcement.
• In fatal defect cases, the delay period may increase.

Abstract