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The impact of industrial incidents on stock market volatility

Corbet, Shaen ORCID: 0000-0001-7430-7417, Larkin, Charles ORCID: 0000-0002-0352-2504 and McMullan, Caroline ORCID: 0000-0002-4229-5690 (2019) The impact of industrial incidents on stock market volatility. Research in International Business & Finance, 52 . ISSN 0275-5319

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Abstract

We examine stock market volatility attributed to industrial incidents involving publicly traded US companies, with contributing factors identified as company violations and safety errors, equipment failure, human error and vandalism. Incidents identified as safety violations elicited the highest costs in terms of equity price reductions, but the volatility effects of these incidents tend to mitigate within two weeks. Incidents caused by vandalism experience the sharpest volatility increases, but reduce within two days. Volatility associated with incidents caused by equipment failure tends to persist for almost four weeks. Injuries cost publicly traded companies $14 million each while fatalities lead to equity market capitalisation reductions of between $465 and $720 million. These results shed light on the equity market’s role as a driver for enhanced compliance with health and safety regulation and with industry good practice.

Item Type:Article (Published)
Refereed:Yes
Additional Information:Article Number: 101125
Uncontrolled Keywords:Chemical incidents; Stock markets; Crisis Management; GARCH; Risk management
Subjects:Business > Finance
DCU Faculties and Centres:DCU Faculties and Schools > DCU Business School
Publisher:Elsevier
Official URL:http://dx.doi.org/10.1016/j.ribaf.2019.101125
Copyright Information:© 2019 Elsevier. CC BY-NC-ND
ID Code:25054
Deposited On:01 Oct 2020 11:51 by Thomas Murtagh . Last Modified 08 Jun 2021 14:11

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