Product recalls can have longer term effects on shareholders, including altering the company’s financial profile, hurting its performance in the market and harming its reputation. The company may also find itself facing potentially costly securities fraud litigation. Because the failure to handle a recall properly can have short- and long-term financial consequences, management should take extra care in how they handle their products and any recalls, not just out of respect for consumers but to mitigate the harms to the company’s investors.