Do Industrial Incidents in the Chemical Sector Create Equity Market Contagion?

9 Pages Posted: 10 Jun 2014

See all articles by Gavin Brown

Gavin Brown

Dublin City University Business School

Shaen Corbet

Dublin City University ; University of Waikato - Management School

Caroline McMullan (née Keown)

Dublin City University Business School

Ruchira Sharma

Dublin City University Business School

Date Written: June 9, 2014

Abstract

This paper examines the impact of chemical industry incidents on the stock prices of the accident company and their direct competitors. Results show that the incident company experiences deeper negative abnormal returns as the number of injuries and fatalities as a result of the incident increases. The stock value of the competitor companies also suffer substantial losses stemming from contagion effects when disasters occur causing ten or more injuries or fatalities, but benefit from the incident though increasing stock value when the levels of injury and fatality is minor.

Keywords: Chemical incidents, Stock markets, Contagion effects, Risk management, Event study.

JEL Classification: G14, G15, G32.

Suggested Citation

Brown, Gavin and Corbet, Shaen and McMullan, Caroline and Sharma, Ruchira, Do Industrial Incidents in the Chemical Sector Create Equity Market Contagion? (June 9, 2014). Available at SSRN: https://ssrn.com/abstract=2447629 or http://dx.doi.org/10.2139/ssrn.2447629

Gavin Brown

Dublin City University Business School ( email )

Dublin 9
Ireland
0035317006952 (Phone)

Shaen Corbet (Contact Author)

Dublin City University ( email )

Dublin 9
Ireland

University of Waikato - Management School ( email )

Hamilton
New Zealand

Caroline McMullan

Dublin City University Business School ( email )

Dublin 9
Ireland

Ruchira Sharma

Dublin City University Business School ( email )

Dublin 9
Ireland

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