Stock Market Response to Potash Mine Disasters

IÉSEG Working Paper Series 2017-ACF-02

46 Pages Posted: 4 Mar 2017 Last revised: 6 Mar 2017

Oskar Kowalewski

IÉSEG School of Management; LEM - CNRS (UMR 9221)

Piotr Spiewanowski

Vistula University; Polish Academy of Sciences - Institute of Economics (INE PAN)

Date Written: March 3, 2017

Abstract

We examine the stock market reaction to natural and man-made disasters in potash mines. We use a sample of 44 mining accidents worldwide over the period 1995-2016. A quarter of the accidents were the result of a natural disaster, such as flooding, that often ended in the closure of the potash mine. The remaining accidents were caused mainly by human error, and almost 50% were work accidents often associated with serious injury or death. On average, mining firms experience a drop in their market value of 0.89% on the day of a disaster. However, we observe a significantly stronger response of the stock market to natural events. Indeed, the regression analysis confirms that the firm’s market loss is significantly related to the seriousness of the accident. On the other hand, we do not find any other micro- or macro-level factors that determine the stock market reaction following a disaster.

Keywords: potash mine, disasters, event study, working accident, catastrophe

JEL Classification: G14, Q27, Q51

Suggested Citation

Kowalewski, Oskar and Spiewanowski, Piotr, Stock Market Response to Potash Mine Disasters (March 3, 2017). IÉSEG Working Paper Series 2017-ACF-02. Available at SSRN: https://ssrn.com/abstract=2926890 or http://dx.doi.org/10.2139/ssrn.2926890

Oskar Kowalewski (Contact Author)

IÉSEG School of Management ( email )

1 Parvis de La Défense
Socle de la Grande Arche
Paris La Défense cedex, 92044
France

HOME PAGE: http://www.ieseg.fr/en/faculty-and-research/professor/?id=1740

LEM - CNRS (UMR 9221) ( email )

Lille
France

HOME PAGE: http://lem.cnrs.fr/

Piotr Spiewanowski

Vistula University ( email )

Stoklosy 3
Warsaw, 02-787
Poland

Polish Academy of Sciences - Institute of Economics (INE PAN) ( email )

Palace of Culture and Science
Pl. Defilad 1
Warsaw, 00-901
Poland

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