Corporate wrongdoing and board leadership structure: An analysis of the WestJet spying scandal

Abstract

This study focuses on corporate espionage undertaken by WestJet Airlines, Canada's second largest air carrier. Employing a case study, we examine how board leadership-endorsed internet snooping affected WestJet's board structure and performance. We also paired the case study with an event study methodology to enhance the case narrative and illustrate market responses to continuing revelations of WestJet's espionage over time. We find that investors initially discounted WestJet's value then over time reacted more to market changes and positive scandal-related outcomes. WestJet withstood the adverse effects of wrongdoing and regained investor confidence and profitability via substantive and symbolic changes to their board leadership structure. The study's theoretical and practical implications are also given.