How Does the Stock Market Respond to Chemical Disasters?
42 Pages Posted: 19 Sep 2009
Date Written: June 2009
Abstract
In this paper, we examine the stock market reaction to industrial disasters. We consider an original sample of 64 explosions in chemical plants and refineries worldwide over the period 1990-2005. A quarter of the accidents resulted in a toxic release, and half of them caused at least one death or serious injury. On average, petrochemical firms in our sample experience a drop in their market value of 1.3% over the two days immediately following the disaster. Using multivariate analysis, we show that this loss is significantly related to the seriousness of the accident as measured by the number of casualties and by chemical pollution: each casualty corresponds to a loss of $164 million and a toxic release to a loss of $1 billion.
JEL Classification: G14, Q27, Q51
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
The Industrial Pollution Projection System
By Hemamala Hettige, Paul Martin, ...
-
Informal Regulation of Industrial Pollution in Developing Countries: Evidence from Indonesia
By David Wheeler and Sheoli Pargal
-
Controlling Industrial Pollution: A New Paradigm
By Shakeb Afsah, Benoît Laplante, ...
-
What Improves Environmental Performance? Evidence from Mexican Industry
By Susmita Dasgupta, David Wheeler, ...
-
Can Capital Markets Create Incentives for Pollution Control?
By Paul Lanoie, Benoît Laplante, ...
-
Globalization and the Environment: Determinants of Firm Self-Regulation in China
By Petra Christmann and Glen Taylor
-
Pollution and Capital Markets in Developing Countries
By Susmita Dasgupta, Benoît Laplante, ...
-
The Reputational Penalties for Environmental Violations: Empirical Evidence
By Jonathan M. Karpoff, John R. Lott, ...
-
Racing to the Bottom? Foreign Investment and Air Pollution in Developing Countries
-
Citizen Complaints as Environmental Indicators: Evidence from China
By David Wheeler and Susmita Dasgupta