The impact of industrial incidents on stock market volatility

Shaen Corbet, Charles Larkin, Caroline McMullan

Research output: Contribution to journalArticle

1 Citation (Scopus)

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.

Original languageEnglish
Article number101125
Pages (from-to)1-15
Number of pages15
JournalResearch in International Business and Finance
Volume52
Early online date17 Nov 2019
DOIs
Publication statusPublished - 1 Apr 2020

Keywords

  • Chemical incidents
  • Stock markets
  • Crisis management
  • GARCH
  • Risk management

Fingerprint Dive into the research topics of 'The impact of industrial incidents on stock market volatility'. Together they form a unique fingerprint.

Cite this