The Effect of Firm Ownership on Time-to-recall

Abstract

We examine the impact of firm ownership (public vs. private) and the perception of the reputation of the quality of suppliers of the country from where products are sourced on time-to-recall of defective products from the market. Operationalizing time-to-recall as the time that has elapsed from the date of first sale in the market to the date it was recalled, we test the influence of the interplay between firm ownership and perception of the reputation of the quality of suppliers of the country on time-to-recall using data on 400 toy recalls issued in the USA during 2007–2018. We find that time-to-recall is shorter for publicly traded firms than it is for private firms. This effect is more pronounced when the products are sourced from countries with poor perception of the reputation of the quality of suppliers. We discuss the research and managerial implications of our findings.