Natural Disasters – Blessings in Disguise?
24 Pages Posted: 8 Dec 2011
Date Written: December 7, 2011
Abstract
This study examines the impact of natural disasters on market returns and on several industries that are likely to be affected by the disasters. We find that different natural disasters have different impacts on the returns of the market and on those of industries. Our evidence suggests that while earthquake, hurricane and tornado could negatively affect market returns several weeks after the events, other disasters such as flood, tsunami and volcanic eruption may have limited impact on market returns. We also find that construction and materials industry is positively affected by natural disasters but nonlife and travel industries are likely to suffer when a natural disaster strikes.
Keywords: Natural disasters, market returns, industry returns, cumulative abnormal returns
JEL Classification: G14, G22
Suggested Citation: Suggested Citation